Closing a limited company - Not the usual scenario. Please help!

danny1986

Hello there. I hope this is posted in the correct section.

I am currently running two companies (of sorts), one is a sole trader, the other is a limited company. The original idea was to close the sole trader gig and move into the limited company full time.

Unfortunately the limited company has done very poorly, as i was previously in a full-time contracting job (working remotely for a company in the states) on very good money, that ended and I went on my own venture with the ltd company, that failed miserably. I'm finding the tax rate (on my low wages) a huge burden (i'm the only employee and owner) and need to close it and resume the sole trader gig, as the tax was much more lenient and would help me greatly, considering the extreme change in my financial circumstances.

The business (ltd company) has been running for almost a year. What are my options in closing the company, without it affecting the other sole trader part?

I have a small amount of capital which I will need to take roughly half out of to pay my wages for the next couple of months, after that, their will be roughly 2.5k left in the business account.

I can't afford to pay the companies liabilities out of my own pocket, and I doubt the money remaining in the companies account will even pay half of the presumed yearly tax bill. I also won't be able to pay for a 4 week advertisement in a national newspaper. I never announced the company nationally anyway, so I find this requirement rather bizarre. All my work has been international, not national.

I heard striking off would be an option, but doing so could impact my sole trader business, which I need to continue working. All of my assets are owned by myself, and were paid for out of my own pocket, so the company really has little (if any) assets of it's own.

Summary:
- Need to take half of the companies bank balance (5k total balance) to allow me to live for the next month/2 months whilst I am in-between work.
- Company won't be able to pay it's tax bill
- Company has no debts, loans or creditors (bar the upcoming tax bill)
- Company has next to no assets
- Need to keep trading under my other sole trader gig.

Would appreciate any advise.

Alan Shore

What does your accountant say?

If you have a salary of €20,000 then you pay €3,869 in PAYE, PRSI & USC which is exactly the same as if you made a profit of €20,000 as a sole trader.

You should pay whatever taxes are owed and take the balance then file the outstanding CT1, VAT3 and P35.

Get a letter of no objection from the Revenue, get the ad done by

http://www.closedforbusiness.ie/services/strike-off-services/

File the H15 with the CRO.

Job done

dbran

Hi

This does not make any sense. Who calculated the tax?

I think you really need to get an accountant to have a proper look at this. It may be a simple enough thing to solve. Paying them some money may be money well spent.

If the revenue are owed money you wont be able to strike off the company. So it looks and seems that this situation is only going to get worse.

Best Regards

dbran

danny1986

Sorry, I see where the confusion lies.

I meant tax+prsi+social+whatever.

The combination of the three. However after looking into this myself more closely, this seems like a poor idea, especially if the company were to pick up. The idea of paying 40% tax on an income of over 32k+ for a sole trader is sickening, so I think i'll make my life simpler and resolve and close the sole trader and keep the limited company.

Thanks all

dbran

Hi

There is no difference in the level of tax that you pay as a sole trader or as a director of a limited company. The only difference is the timing of the payments of the tax as a director pays tax under the PAYE system.

Everyone pays tax at 41% above €32800. It sounds like you have just taken the money out of the company without operating payroll?

dbran

danny1986

dbran wrote: »

Hi

There is no difference in the level of tax that you pay as a sole trader or as a director of a limited company. The only difference is the timing of the payments of the tax as a director pays tax under the PAYE system.

Everyone pays tax at 41% above €32800. It sounds like you have just taken the money out of the company without operating payroll?

dbran

Oh really? I wish I could find a website that lays all this information out. It all seems scattered around with contrasting numbers. Is there such a resource out there? Just to get a sense of the numbers without being bogged down in legal jargon

Thanks

dbran

Hi

I honestly think that you need to go and meet someone who can sort out this for you and give the correct advice based on the circumstances. More reading of revenue.ie or citizensinformation.ie is not the answer.

Regards

dbran

danny1986

dbran wrote: »

Hi

I honestly think that you need to go and meet someone who can sort out this for you and give the correct advice based on the circumstances. More reading of revenue.ie or citizensinformation.ie is not the answer.

Regards

dbran

Yeah, your right. Annoyingly my accountant was the one who suggested this farce, when it might not actually be in my best interests. I honestly barely have enough time in the day to do my job, let alone learn the legal side of my business too.

I'm also living in a small town, so i'll be lucky if there is another accountant here, let alone if they are better than my current one.

It would be so much easier for me if I could use a good accountant, regardless of their location and if communicating with them via email, phone and post was sufficient. I waste so much time with this stuff it's not even funny. Feels like i'm paying them for me doing the work.

Thanks

dbran

Go back to them and explain the situation that you are in. See if they can suggest a course of action that solves the problem. Otherwise get a new accountant.

Provided that you keep proper books and records of both businesses this should not be an unsolvable problem.

dbran

dbran

dbran wrote: »

Hi

There is no difference in the level of tax that you pay as a sole trader or as a director of a limited company.
dbran

Aye but one is the honesty system and one is not, I can imagine the declared and actual amount for sole traders is night and day!

Alan Shore

[Deleted User] wrote: »

Aye but one is the honesty system and one is not, I can imagine the declared and actual amount for sole traders is night and day!

Both work under the self assessment system?

Alan Shore

Alan Shore wrote: »

Both work under the self assessment system?

Dont you need an accountant to sign off on Ltd Company accounts?

Alan Shore

[Deleted User] wrote: »

Dont you need an accountant to sign off on Ltd Company accounts?

Ya up to 15 years ago.

Only companies that need audited accounts have to have an external accountant sign off on their accounts.

Alan Shore

Alan Shore wrote: »

Ya up to 15 years ago.

Only companies that need audited accounts have to have an external accountant sign off on their accounts.

Ah ok my bad.

delahuntv

danny1986 wrote: »

Yeah, your right. Annoyingly my accountant was the one who suggested this farce, when it might not actually be in my best interests.

The massive advantage of a limited liabilty company is hinted at in the name - limited liability.

I don't know the line of work you are in, but if for example you are in IT and work you did caused failure in a company;s system and cost them €100k in losses/costs, they could sue you.

A limited liability company protects you personally from such scenario.

That's an extreme situation, but same if someone who owed you money didn't pay and you ended up not being able to pay others, the company protects you personally.


Ask your accountant or a business advisor in an enterprise centre (or even revenue themselves who I always find are very helpful) for advantages/disadvantages of limited liability before committing one way or the other.


As for location of accountant - mine is almost 40 miles away from my office. He's based in Carlow and has many clients in Dublin, so that should not be a big consideration!

Trojan

delahuntv wrote: »

Ask your accountant or a business advisor in an enterprise centre (or even revenue themselves who I always find are very helpful)

+1 (to all three)

delahuntv wrote: »

As for location of accountant - mine is almost 40 miles away from my office. He's based in Carlow and has many clients in Dublin, so that should not be a big consideration!

+2. My accountant is in Meath, and I'm in Mayo. I've met him twice in 7 years, we do business by email, phone and post.

I've never done it but the 4 weeks of national paper advertising LTD closure sounds excessive, I think that might be 4 weeks notice in a national paper advertisement.