Companies and Money

laybackandwin

My accountants have gone out of business so I'm looking for new ones. 

Trying to work out how to go forward but cant get an answer from anywhere so trying this hive mind.

I have experienced a lot of turmoil in my business the last 18 months from losing my best clients who have closed due to not recovering from the covid era to losing my only employee who had to quit after contracting sepsis.

In the past 12 months the ltd company has turned over less than £500 and I have lived on my savings and my partners income.

I have big ideas for next year and getting back on track but that might take 6-12 months to see decent returns. So I'm wondering if I should close the limited company and go sole-trader then restart the ltd company or create a new one when business picks up or carry on as a ltd company.

I'm running short of savings now so wonder too if I am able to claim some sort of benefit as my previous accountant said that I would not be entitled to anything even though the director of one of the companies I had as a client was able to claim UC and grants when they had to close for a year.

Thank you in advance 

T

tacpot12

Assuming your company is a trading company, then you would appear to be able to claim Universal Credit. This link confirms: Limited companies and universal credit | Low Incomes Tax Reform Group

If you claim Universal Credit, you will either be expected to look for work or to be actively seeking to increase your business's profit. You should try to argue that you are in a startup period because of the lost of your key customer, and that you are spending at least 35 hours a week trying to rebuild the business. Do consider taking part-time work to get money that you can invest in the business.

Whether or not to keep the existing Limited Company going should be decided on whether the business needs to be a limited company or not. As a sole trader, you were personally liable for all the business's' debts. If your business can incur substantial debts and/or become liable for substantial amounts due to the nature of the business, then you probably need to keep it running as a company. But if there is no risk of debt or other liabilities (or you can insure against them), then changing to be a sole trader will save money and avoid the need to find an accountant. 

If you are not familiar with the Profit First system by Mike Michalowicz, I'd recommend you get hold of a copy (the Kindle edition is the cheapest way to buy it). This will set you up to do you own (practical) accounting. You will probably need an accounting package as well to meet the HMRC requirements for record keeping. I can't recommend any free ones as I am still using a version of Quickbooks I bought in 1995!

If you want to claim Universal Credit (UC) and change to being a sole trader, you will need to decide what order to do this in. Closing down the company will take time, and it sounds like you need the financial help asap, so I think I would claim UC first and then start the process of closing down the company and registering as a sole trader. You might need to do some research or take advice from an accountant if there are assets that belong to the Limited company that need valuing before they can be transferred to you.

born_again

In terms of UC it will be as a couple (given mention of partner) so their income & savings will be part of the claim.

To give you a idea if you might get anything

https://www.entitledto.co.uk/

Bookworm105

closing down the Ltd without guidance from an accountant would be foolish if it still has money in the company bank account or any other assets on its balance sheet as the tax consequences of taking the money out can vary