Desperately need advice regarding business

mols1998

I have a small business with a small number of clients. Due to these difficult times, the business is losing clients right left and centre, to the point where I'm having to top up the money (out of my own personal savings) to cover the wages of my 2 employees. The company is no longer profitable and I cannot afford to pay redundancy to the staff. What can I do in this position? The company doesn't have debts (at this point) but with the way things are going I don't know how much longer it will stay debt free. I'm depleting my own savings which is also not sustainable long term.
I could potentially hand over the business to another owner who would take on the clients, but what happens to the staff then? How long does the new owner need to keep them on before making them redundant? Can the business go into liquidation with no debts?
Obviously I want to do the right thing here but I'm at a bit of a loss.
Many thanks for any advice.

Savvy_Sue

Are you a Ltd Company?

mols1998

Savvy_Sue said:

Are you a Ltd Company?

No, sole trader

Jeremy535897

As you are a sole trader, the business cannot go into liquidation. You will be personally liable for all its debts, including redundancy (and if you become personally insolvent you can look at an individual voluntary arrangement). If you can sell the business to someone else as a going concern, the obligations to the staff (including redundancy) should transfer to the new owner, depending on what you agree.

lincroft1710

If you cannot afford redundancy pay, how can you afford staff wages? If your business is not viable, who would want to take it on? Could you run it on your own or with just one employee?

macman

If you have been propping up your business with your own funds just to pay staff wages, then the company already has debts in reality. Viewing it any other way is just putting your head in the sand.
You don't need to be in debt to wind up the business, but you need to be able to discharge any obligations to staff, including redundancy if due. 
A sole trader has no legal entity, so any debts are yours personally. 
What is your accountant's view of this situation? They must surely be aware that you have been subsidising the business yourself?

[Deleted User]

Take the hard decisions asap. Something I've learnt over the years, delaying rarely leads to a better outcome.
Use an online calc to establish what (if any) redundancy you owe and go from there.
You could be doing the employees a favour by letting them go now, as the jobs market is still buoyant.
Could I also suggest that you consider additional/alternative employment yourself to keep money coming in?
Using your own money to fund the business will deplete your capital quickly and can spiral into debts.
Unless you're convinced that there's 'jam tomorrow' cut your losses and move on....