Closing down a company

EKRIUQ

I hope to close down a company that I am a director of next April, if at all possible I was thinking of going down the voluntary liquidation route but would it be possible to keep it open as a business entity so I can use it for small jobs.The company had a history of trading losses so there won't be any corporation tax payable for a long time.

I now have a paye job that puts me on the higher tax bracket.

I'd estimate that the extra income would be only about 4-6k a year.

If I close the company I presume I will be liable to 42% income tax on these extra earnings whereas if I kept the company open could I just use the income received to be a loan repayment which I did give the company.

Probably the biggest obstacle for me would be the cost of filings the returns each year would it cost me 1500-2k to do returns if I only have about 10 invoices each year. I normally did all the books myself.

Would this just mean then that after the filing of accounts charges and paying my tax I'm left with nothing or even short.

I will be talking to my accountant about it but I was just looking for any suggestions or ideas people might have.

y0ssar1an22

EKRIUQ wrote: »

I hope to close down a company that I am a director of next April, if at all possible I was thinking of going down the voluntary liquidation route but would it be possible to keep it open as a business entity so I can use it for small jobs.The company had a history of trading losses so there won't be any corporation tax payable for a long time.

I now have a paye job that puts me on the higher tax bracket.

I'd estimate that the extra income would be only about 4-6k a year.

If I close the company I presume I will be liable to 42% income tax on these extra earnings whereas if I kept the company open could I just use the income received to be a loan repayment which I did give the company.

Probably the biggest obstacle for me would be the cost of filings the returns each year would it cost me 1500-2k to do returns if I only have about 10 invoices each year. I normally did all the books myself.

Would this just mean then that after the filing of accounts charges and paying my tax I'm left with nothing or even short.

I will be talking to my accountant about it but I was just looking for any suggestions or ideas people might have.

are the other directors on board with it being struck off?

no, it is on the register or not. you could set up as a sole trader for your side job maybe?

presumably any income you earn will be taxed at 52% (paye @40%, prsi @4%, USC @ 8%). better keeping it in the company until the company has fully discharged your directors loan. this is essentially tax free money to you. however you will have the 12.5% ct (or not, with the ct losses)

if you only have a few transactions the cost you are estimating seems about right to me. you may get it done for cheaper. have you still got your audit exemption?

could you look to sell the company? i know there is anti-avoidance around this (cant remember exact rules, but talk to your accountant), but if the accumulated losses are substantial another company might buy yours to avail of those ct losses.


very roughly speaking:

revenue: 6000

expenses:

accountant fees: 1500
phone: 200
light/heat: 200
filing with cro: 20
cost of sales: 1000


net profit: ~3000

no ct.

use the profit to pay back your directors loan. you get that 3000 tax free.


i am sure there are other considerations, and its a friday night so not really in the mood for deep thinking on this. but hopefully some food for thought, and do speak to an accountant.

EKRIUQ

Thanks, that's something on the lines that I was thinking. There's no problem with the other director.

have you still got your audit exemption?
yes all accounts are up to date.

Would it be a positive thing to re register for VAT, I know I would have to make returns but might be able to claim on things like new equipment and office expenses. I work remotely

The_Chap

If you are doing all the accounts yourself what are you paying the accountant to do if you have audit exemption? Just file them yourself?

EKRIUQ

I can do the accounts but filing them to CRO I wouldn't be that confident.

Plus I would still need an An auditor’s report (with the section of the auditor’s report required when claiming the small company exemption) (S.356(1) Companies Act 2014

y0ssar1an22

EKRIUQ wrote: »

I can do the accounts but filing them to CRO I wouldn't be that confident.

Plus I would still need an An auditor’s report (with the section of the auditor’s report required when claiming the small company exemption) (S.356(1) Companies Act 2014

abridged audit exempt accounts dont need an accountants report (an auditors report is n/a to audit exempt)

y0ssar1an22

what you could do is prepare the pl and bs. if you write up the bank, have all backup documentation it'll help. ask an accountant to put those into relate/sage/whatever software so the accounts are compliant with company law. you might be able to negotiate ~€500 (less maybe? i'm not sure)

y0ssar1an22

re the vat. i'm not too sure. you'll need to crunch the numbers. run 2 simulations - 1 as vat registered, 1 as not registered. see which 1 gives you the best result

The_Chap

If you can attach a pdf to an email, you can file to CRO, it’s that straight forward, abbreviated balance sheet is a doddle to draft up