Winding down a business

D

DBKenny

Guest
Hi. I have a 50% stake in a small services company. Business is on the wane. At some stage we'll need to make a decision on the future viability. We have some cash reserves, about 50k. I would like to make hthat decision sooner rather than later, so that we are not down to our last euro when we call it a day. What would be the best way to do this in order to minimise exposure to tax? There are two directors, i.e. the owners. We have 4 staff, two part time, two full time. I would want to do the right thing by way of redundancy if that was relevant. So if we decided to put the wheels in motion tomorrow to stop all work, how would be best access the 50k as directors, while paying as little tax on it. would it be to close the business down and pay ourselves redundancy payments or something like that?

Thanks in advance for any suggestions.
 
I think you should talk to an advisor.

But as far as I know, unless you have made some loans to the business that you need to be repaid, any extraction from the company (be it via payroll or as profit) is taxable as income.

You might be able to stick it into a pension fund?

Don't forget there's fees for winding down the business too.

You might be eligible for redundancy or termination payments.
 
I am doing exactly what you propose.Have nearly finished.....

Paid all debts, paid staff redundancy-you get 60% back after about 6 months-then I and my wife/co-director took "termination of employment" payments. These tax free sums you can withdraw from the company.
You need to google it and read the various websites on tax-free termination of employment regulations for people like yourself.

Your aim is to make sure there is no money left in the company. If there is no money left then you can just "strike off" the company. Google strike off and/or see posts on AAM about strike-off.

You cannot "strike off" a company if there are assets or liabilities.

Having paid all debts, tax and redundancy and having waited a reasonable period to ensure that every thing was in order -and having got final audited accounts -i had a problem.....
I still had 140k in the company which equals what i put in it some years back.

But I couldnt take it out of the company even though it was "my money" because Revenue would see this as a sort of payment above the tax-free termination of employment payment. I had to properly and legally cease trading before taking the money.

Because this 140k is an asset i can't go thru the strike-off process.

So I am now going thru "members voluntary liquidation". Normally one goes through an accountant to do this ,but -as per another long boring post of mine - I am doing this myself, rather than toss an accountat a few grand for what is very little work for a company with no assets or liabilioties, save some cash.

Doing things properly and legally is a drag . From what i've seen of others they just pocket the money (often not paying redundancy or other debts) and close and nothing -usually -happens.

Hopes the above helps...
 
Hi

It may be a "drag" but sometimes its necessary. You cant liquidate a company yourself, thats illegal. Even if you use a false name or the name of your friend (yes I read your other post). The danger is it could be construed as an invalid liquidation of the company. The company was never liquidated and therefore, an income tax liability which could be anything up to 50% ie 70k plus the interest and penalties as you would have no doubt withdrawn the money by then.

And if you dont file the forms correctly then it becomes a creditors voluntary liquidation or worse you have to go to the high court for direction and hire a solicitor, a baristor etc. You wont be able to withdraw the forms and repair them.

Members voluntary liquidation should normally cost in and around 2k if you shopped around. But its 2k for a reason.

Good luck with it anyway!!

capnhand
 
yes capnhand I appreciate your points.
I've shopped around -got several quotes -after carefully explaining that the company hadnt traded for a year, had just had final audit, had got its travel agency bond back from the govnt as there had been no claims on it. Absolutely nothing to do except submit those forms.
The cheapest quotes I got were 2.500plus VAT and ,naturally, reimbursements.
I think that the accountants concerned hadnt come across my situation before- absolutely no debts, creditors or assets except my money as share capital.

As everything is 100% in order and have done everything legally and properly for years I've no worries about any come back.
Yes, slight worry about not doing a form 100% correctly- but to pay one months average wage for a few hours work just seems too much.

(People have mentioned that the liquidator takes a risk. I reckon that handing over 140k to a liquidator is somewhat my risk.)

I will use a real person who is not barred from being a liquidator. I presume the person has to be alive?
 
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