Q. How do I close a limited company?

A. You need to have the agreement of the company’s directors and shareholders. The way you close the company depends on whether it can pay its bills or not.

If the company is able to pay its bills, it’s solvent and you can either apply to get the company struck off the Register of Companies or start a members’ voluntary liquidation. Striking off is usually the cheapest option.

If the company can’t pay its bills it is insolvent. Here, the interests of the people your company owes money to (creditors) legally come before those of the directors or shareholders.

You must use the creditors’ voluntary liquidation process. If you don’t pay creditors your company might be forced into compulsory liquidation. You may be able to avoid liquidation by applying for a Company Voluntary Arrangement.

If the company doesn’t have a director - for example if a sole trader has died - you must appoint a new one. Companies House will eventually strike off a company that doesn’t have a director but this can make it more difficult to manage any assets. If a sole director has died and there aren’t any shareholders, the executor of the estate can appoint a new director, if the company’s articles allow it. The new director can close the company.

If the company is no longer trading, rather than close it you can let it become ‘dormant’ and your company will remain registered at Companies House. In this case, you must still submit annual accounts and confirmation statement to Companies House. You can keep a limited company dormant indefinitely.