How to shut down your contractor limited company

IT Contractor Insurance
Professional Indemnity insurance for contractors + public and employers' liability cover - try Hiscox.

How to shut down your contractor limited company

Posted May 5, 2009

In this article, we look at the processes involved in closing down your limited company for good.

If you have decided to cease using your contractor limited company, rather than making it dormant for a period of time, you need to follow the following steps to complete the process.

Assuming the company is able to meet any outstanding debts, once you've decided to close the company, you should not run any further transactions through the company aside from those related to closing the company.

1. If your company has any creditors, or other shareholders, you will need to warn them in advance as in case any of them object to the company being struck off.

2. You will need to settle any outstanding debts you may have.

3. Assuming you are VAT registered, you need to cancel your VAT registration with HMRC (Form VAT 7 (PDF)

4. A final payroll will be run for you and any other staff you employ, who will all be issued with P45s. The company will also be required to submit a final employer annual return (P35) to HMRC.

5. Final accounts should be prepared and submitted to Companies House. This step might take place a few months after trading has ceased, to allow for any final reconciliation / expenses to be accommodated.

6. You must settled your final Corporation Tax bill. You have 9 months to do this, however the company cannot be shut down until all tax liabilities have been settled.

7. Any money left in the company, after all expenses and tax liabilities have been settled, should be distributed to shareholders.

8. 3 months after the business has ceased trading, you can apply to Companies House to have the company struck off. You will need to submit Form 652a (PDF) (Application for striking off) for this purpose, and pay a £10 fee.

You should also refer to this Companies House guide to striking off a company, and ideally your contractor accountant should guide you through the entire striking off process.

| ©Contract Eye Ltd. Protected by Copyscape. Please scroll down for related articles.

Contractor Services

Professional Indemnity Insurance - Essential cover from Hiscox
The fair umbrella company - take home more pay with paraplus
InTouch Contractor Accounting - specialist online service & great advice
Parasol - the UK's favourite umbrella company
Contract Experts - ClearSky Accounting on 08000 325 326
Helix Management Ltd - Up to 90% retention. Same day payments.
Umbrella Company - 12,000 contractors can't be wrong!
Together we're stronger! - Join PCG, representing contractors
Cloud 9 Group - Umbrella Solutions only £27.50 per week
Qdos - IR35 experts - Providers of low cost contractor insurance
K & B Accountancy Group - Fixed fee contractor accounting only £75pm
Free IR35 & Tax Review - Call ICS on 0800 195 3750
Contractor Mortgages - the best deals, based on your contract rate alone!

IT contractors - what is a limited company?
Most IT contractors work via a limited liability company. So what is a limited company, what are your responsibilities as a director?

Forming a limited company - which documents do you need to complete?
Contractors thinking of going into business for the first time may be daunted by the thought of forming a limited company. However, in reality, the company formation process is not complex.

As a company director, can I keep my home address private?
Following the introduction of the Companies Act 2006, limited company directors can provide a 'service address' to appear on the public record, and keep their residential address private.

Limited company dividend vouchers and board meeting minutes
A limited company must record its intention to issue dividend payments via board meeting minutes, and issue each shareholder with a dividend voucher. A simple guide to getting the paperwork right.

How to change the name of your limited company
At some stage during your contracting career, you may decide that you would like to change the name of your limited company.

Limited company contractors - what are dividends?
A guide to dividends for contractors and small businesses. How to calculate them, when to distribute them and what paperwork you need to complete.

Guide to setting up a limited company
How to set up a limited company for your new business. What are the legal requirements?

Contracting via a limited company - advantages and disadvantages
We look at the advantages and disadvantages to contracting via a limited company, the most tax efficient way to contract.

Contractor limited company naming tips
If you have decided to contract via your own limited company, one of the first tasks you need to do is choose a suitable name for your new enterprise.

How to incorporate a limited company
If you are thinking of contracting via your own limited company, there are typically three ways of incorporating your new company.

Your duties and obligations as a limited company director
If you are a limited company contractor, there are a number of duties you must perform by law as company director. You also have several financial and legal responsibilities which you should be aware of.

Choosing a name for your limited company
If you want to set up as a limited company contractor, there are some things you should look out for when selecting a company name.

How do I switch from an umbrella company to a limited company?
Moving from an umbrella to limited company structure should be a hassle free process - here are some things to bear in mind before making the move.

Companies House and limited company contractors
Limited company contractors will communicate with Companies House in a number of ways each year, from submitting their annual returns, to providing company information updates.

Can anyone become a limited company director?
Are there any restrictions on who can become a limited company director, and do you need any qualifications?

Looking for a new service provider?

Accountants
Umbrella Companies

IT Contractor Tax Limited Company Accounts Accounting