Closing a Limited Company: A Guide

/in /by

StrategyDriven Managing Your Finances Article |Closing a Limited Company|Closing a Limited Company: A Guide Making the choice to close a business is never a simple or easy process, but that process is made much, much harder if you do not know what is coming your way. There is more than one way to close a limited company as it depends on whether the company can settle its debts within a reasonable timeframe. If the company can repay its creditors, there are two options: company dissolution or solvent liquidation.

However, if a company is not able to repay its debts and/or has liabilities that are greater than assets, this is known as an insolvent company. These companies must close either by a compulsory or voluntary liquidation. Liquidation is the selling of the company’s assets so that the proceeds can be used either to repay creditors or shared among shareholders.

This guide aims to outline the options available when closing a limited company.

Closing an insolvent limited company

Creditors’ Voluntary Liquidation (CVL)

An insolvent company is an option for companies that are in a lot of debt, which they will struggle to repay. They may also be concerned that creditors may sue them if they do not declare insolvency. Companies that are insolvent but do not prioritize repaying their creditors could find themselves under scrutiny from the Insolvency Service. A CVL can not only prevent these issues but can also enable directors to claim redundancy. A redundancy pay-out could go towards repaying some creditors or paying other professionals involved in the insolvency process.

If you think that your company is insolvent, you need to stop trading immediately so you can protect your creditors. Your shareholders need to vote in favor of a winding-up resolution (with at least 75% in favor).

The next stage is to put together a repayment proposal outlining how you intend to repay creditors. If the creditors vote to accept it, they can appoint an insolvency practitioner. The practitioner will take control of the sale of the company’s assets so that the proceeds can be used to pay creditors.

It is always best to seek professional advice when it comes to business finances and legalities to ensure you acting lawfully and in the best interests of your shareholders, creditors, and employees. If you would like further information about a Creditors’ Voluntary Liquidation, visit https://antonybatty.com/company-liquidation/creditors-voluntary-liquidation.

Compulsory liquidation

The other form of company liquidation is compulsory, i.e., enforced closure. Compulsory liquidation can be initiated by the company, a director, or by creditors. A creditor can petition the court for a company’s winding up if they are owed £750 or more. A winding-up petition needs to be submitted to the court to kick the process off. In some cases, directors of the company may be investigated to ensure that there was no fraudulent activity or misconduct, which led to insolvency.

Closing a limited solvent company

Members’ Voluntary Liquidation (MVL)

Members’ Voluntary Liquidation is an option when a company has naturally come to the end of its life, or when the owner or director of the business wishes to move on or retire, and there is no one else to continue running the business.

To start the MVL process, a Declaration of Solvency needs to be signed. This confirms that the company is financially solvent before it closes. When this has been done, the shareholders need to vote and pass the resolution, assuming at least 75% are in support of it.
At this point, a licensed insolvency practitioner (IP) needs to be appointed to manage the process. This could include the sale of company assets, paying creditors, and distributing any remaining funds amongst shareholders.

Company dissolution

Another option is to dissolve a company, but it must be a solvent company. It is a lower-cost option involving removing the company from the Companies House register. Before applying for company dissolution, several steps need to be taken.

The company needs to cease trading 3 months before it is removed from Companies House, close the payroll, repay all creditors and ensure all statutory liabilities have been met, such as National Insurance and tax.

The creditors also need to be informed that the company will be dissolving. This is an important step, as if not done correctly, a creditor could apply to have the company reinstated at a later date.

When these steps have been taken, a DS01 form needs to be sent to Companies House with an £8 fee. This can be done by post or online.

A notice should be placed in your local newspaper announcing that the company will be closing, with a formal confirmation of the closure three months after that.

Renting vs. Purchasing Construction Mats: Which Option Is Right for Your Business Needs?

/in /by

StrategyDriven Managing Your Finances Article |Construction Mats|Renting vs. Purchasing Construction Mats: Which Option Is Right for Your Business Needs?Construction mats, also referred to as access mats, crane mats, or equipment mats, serve a few important purposes. They protect the environment from the harm that could be caused by heavy equipment, create temporary roads and bridges, and provide a stable platform for heavy equipment to ensure safe operation.

While it’s usually obvious when a construction firm or contractor needs construction mats, it can be more difficult for business owners and independent equipment operators to determine whether they should buy mats or rent them for individual projects. Read on to find a few questions contractors or business owners can ask themselves whose answers will help clarify which solution will be a better fit.

How Long Will the Mats Be Used?

First, determine how long the project will take to complete. As a general rule of thumb, contractors should purchase mats for any project that will take six months or longer to finish. Spartan Mat offers a wide variety of new and used construction mats and also offers rental options for those who decide it’s not worth the money to buy the products outright.

Those who want a more precise idea of how much they will pay can add the amount of rent they will pay to the cost of shipping the mats back to the rental company. If it is approaching the amount of money it would cost to buy the mats outright, that’s usually a better choice.

How Likely Are the Mats to Break?

Most rental companies charge clients the price of the mats if they break, so it’s important to take the likelihood of this happening into account. There are many factors that influence how well construction mats will stand up to use, including the age of the mat, the number of times it will be moved throughout the project timeline, what type of machines will be placed on it, and whether it will be sitting in the mud.

Companies that plan to use their mats heavily in less-than-ideal environmental conditions should expect some breakage, even if they rent high-quality products. Ask the rental company about its policy regarding broken mats and consider the particulars of the job in question before deciding whether to rent or to buy.

How Much Will It Cost to Ship the Mats?

Rented construction mats must be shipped to and from the job site, and renters are often responsible for paying the return freight. If the rental company is far away, the cost of shipping the mats back after the job has been completed can make a huge difference when it comes to economic feasibility.

How Often Will the Mats Be Used?

All other things considered, if a company needs to use construction mats on a regular basis, it’s worth buying them instead of renting them. When renting other types of equipment, contractors can take advantage of perks like not having to deal with maintenance and equipment breakdowns, but since most rental companies require renters to pay for broken mats, this is a different story. As long as the company has a safe place to store them, buying mats will save money on shipping.

The Bottom Line

There’s no one right answer to the question of whether it’s more economically viable to buy or rent construction mats. Every situation is different. Contractors and business owners should now have a better idea of what factors they should consider when making this important decision.

12 Ways To Save Money While Running Your Business

/in /by

StrategyDriven Managing Your Finances Article |Save Money|12 Ways To Save Money While Running Your BusinessAs far as entrepreneurship is concerned, every penny counts. While you try your best to pool resources to set up your business, your employees and suppliers deserve their paychecks. To meet the growing financial demands that come with putting up a business, you may have to implement good economic policies to unlock extra cash and save more money. Here are some ways through which you can cut down your business expenses and save cash.

1. Get rid of surplus equipment

During the start-up phase, some business owners strive to acquire tons of equipment. But as operations begin, some equipment may become redundant. Examples include printers, ink, toner, and cartridges. Surplus equipment takes up much of your office space. Moreover, they wear out with time, and will gradually depreciate when you don’t get rid of them early enough. Instead of watching your unused printer ink and toner waste away in your office cabinet, why not sell them to suppliers such as Sell Toner. This way, you will make extra cash while getting rid of surplus equipment.

2. Set up a virtual office

Thanks to technological advancements, businesses don’t have to tether their offices to one location. You can run your business while staying at home by using technological tools to connect with your staff as well as your customers and business partners. Virtual offices allow you to run your business with little resources since you don’t need to have a physical building. Focus on establishing your customer base, after which you can then put up a commercial building.

3. Use Open-Source software

A lot of business software is reconfigured open-source software from volunteers in the business community. This means that they are obtained from non-proprietary sources. Comparatively, open-source software costs far less than proprietary commercial software. Whether you want accounting or bookkeeping software, there are several non-proprietary software that can help you save money while getting your basic tasks done. However, you may have to bear with the fact that the support service for open-source software is limited. But the good news is that business owners who use open-source products can join community forums to access support services from other users.

4. Find discount offers

Usually, bulk-purchasing is cheaper than when you buy products individually. Before ordering products from your chosen supplier, ask them for discount offers. Many suppliers will be willing to slash off prices for customers who have a long-term business relationship with their company. Do some research and find multiple suppliers, negotiating prices before you settle on the most cost-effective. Also, do not tie yourself to one local supplier. To increase your sales opportunities, move out of your comfort zone, and connect with suppliers who offer discounts on shipping and bulk orders.

5. Track the flow of your cash

Another vital activity for saving money is tracking cash flow. When you track the flow of your cash, it saves you from incurring late payments fees — also, you will not miss your bill payments. The majority of small businesses often fail because they are unable to conserve their cash. The opportune time to start tracking your cash flow is during the initial phase of your operation. To generate revenue, your funds have to pay your regular expenses, including the unforeseen ones that may erupt. By looking at the statements of your cash flow on an annual and monthly basis, you will understand the value of your cash and whether it’s enough.

6. Reduce your expenditure on traditional advertisement

With the rise of the internet revolution and digital marketing, business owners have the means to cut down their costs of traditional adverts. Reach more audiences via the internet by using paid advertising resources such as Google AdWords. Use search engine optimization techniques to build a great website and attract customers to your business. Some business owners are able to garner hundreds of thousands of views by creating videos on YouTube to promote their products. This is almost a free way to advertise your business to a global audience. Traditional advertising platforms are expensive, and may not broadcast your business to wider audiences.

7. Outsource some tasks

When you have a strong team of full-time employees, your business has the potential to grow. However, permanent employees also sometimes cost a business its financial resources. Salaries, insurance covers, and office spaces are some employee-related costs that businesses often struggle to settle. So, consider outsourcing your tasks to virtual assistants (VA’s) to reduce your workload, improve work efficiency, and save money. Virtual assistants are skillful people who work from locations across the globe to get your special tasks done in time. Since VA’s have their own office spaces and equipment, you can save money assigning repetitive tasks to them. As a business founder, this will free up more time to focus on building the core parts of your business. Negotiate with independent contractors like VA’s, and you are likely to make a fair deal that will benefit both of you.

StrategyDriven Managing Your Finances Article |Save Money|12 Ways To Save Money While Running Your Business8. Cut down extra expenses on employees

The Covid-19 Pandemic has turned the world upside-down. It has negatively impacted the global economy to some extent. For businesses whose finances have been hit hard by the pandemic, laying off workers may be an idea worth considering. This will have to start with an evaluation to find out which employees go and which stay. However, since employees form the backbone of your business operations, and you don’t have to fire all of them even if times are hard. If you do so, your business may suffer disastrous consequences.

Instead of laying off all your employees, negotiate with them for a pay cut. If you were providing them with free three-square meals a day, reduce it two or one. For example, assure them of their breakfast and cancel their lunch and dinner. Your employees who understand the economic burdens on your business will readily accept pay cuts. After all, half a loaf of bread is better than none. By implementing this strategic decision, you can save money to run your business even during tough times, such as the coronavirus pandemic.

9. Hire smart workers

The levels of smartness of your employees can also determine how economical your business is. On this subject, you don’t have to use only the experience factor to rate the abilities of your employees. In recruiting new employees, give chances for inexperienced people (recent graduates) provided they are smart enough to fit your work demands. Some workers may not have several years of experience, but they can learn fast once you put them on the job. Hire inexperienced people and pay them entry-level salaries. This way, your business will gain a monetary advantage. Meanwhile, your smart workers will contribute their best to grow your business.

10. Hire interns

The two main types of internships are paid and unpaid internships. Interns are usually students or recent graduates who work for companies in order to gain experience in their chosen field of study. Many times, interns work for experiences, not necessarily for the money. Marketing organizations have been able to achieve their goals by hiring interns from local schools to build their social media marketing campaigns. It is up to you to also understand your business operations, and find out areas that match the skill set of interns. By hiring interns instead of full-time permanent workers, you can cut down your expenses on salary and even office space. When this is done together with telecommuting, you can run a small business by getting tasks accomplished for a fraction of their standard costs.

11. Understand your customers

As technology advances, so do customers evolve with time. When you know your customers’ demographics and behavior on the internet, you can streamline your online marketing campaigns to reach the desired audience. Channel your marketing investments on online platforms that are likely to pay off, instead of spreading your campaigns to several areas on the internet. When you understand your customers’ preferences, responses, and general views about pricing, then you can prepare a reasonable budget and avoid losses. Eliminating ineffective options means that you are in a better position to make wise investments by targeting the right customers.

12. Reward your hard-working profit makers

This may seem controversial, but it makes sense to motivate your workers and customers who bring you the profits. For many successful entrepreneurs, rewards take the forms of good gestures such as the occasional provision of free refreshments, leaves, promotions, and salary increments. Boost the morale of your employees, and they will be encouraged to do more for the business. Offer value-added services and discounts to your regular customers so that you can win their everlasting loyalty. If you invest in the people who bring you profits, you’re nurturing a friendly relationship that will go on to bring extra profits to your business.

To wrap things up, your ability to economize the limited resources at your disposal will determine the growth rate of your organization. The above money-saving tips may be the best ways to build a resilient business that will thrive no matter the business climate.

5 Viable Options for Financing Your Small Business

/in /by

StrategyDriven Managing Your Finances Article |Financing Your Small Business|5 Viable Options for Financing Your Small BusinessFinancing a small business isn’t always easy, but there are plenty of solutions available, no matter how bad your credit rating is. Before you start looking for finance, however, make sure you have a strong business plan. Lenders will want to see evidence that your busines is viable, even if you don’t need a lot of cash to get the ball rolling. In addition, be prepared to put up some collateral, either your personal assets or shares in the business. Often, loans come with strings attached, not just interest!

In this article, we will look at the best solutions on the table.

Credit Card

When you don’t need a huge amount of capital, easily accessible funding options like credit cards are a useful tool. The great thing about credit cards is that they are flexible, so if you only need a short-term cash injection to buy supplies, a credit card may work for you.

It’s even possible to enjoy a 0% loan if you look around for a good deal. Plenty of credit card companies have 0% introductory offers for new customers but bear in mind your personal credit rating will dictate which offers are available to you.

Bank Loan

Approaching your bank manager for a business loan is another option, but this one takes longer to sort out. Banks don’t typically throw money at customers these days; they were too badly burned in the financial crash of 2009. You’ll have to provide a solid business plan, as well as detailed cash projections outlining how you plan on repaying the money. If everything looks good on paper, you should have no problem qualifying for a business loan.

Specialist Lender

While high street lenders have their place in the finance sector, they don’t tend to work for people with bad credit or niche requirements. For example, if you have CCJs in your credit report or you want to start an online business selling CBD products, mainstream lenders won’t touch you. You’ll need a specialist instead.

Luckily, specialist business models and bad credit doesn’t have to hold your business back. There are lenders who will consider most applications, no matter how off-the-wall, so don’t assume your business idea is doomed if you have a few late payments on your report.

Crowdfunding

Crowdfunding has allowed all manner of businesses to achieve their potential. Thanks to sites like Kickstarter and Indiegogo, startups like Pebble and Oculus have achieved phenomenal success. As long as you have a great pitch and people can see the potential in your business plan, the money will flow your way. In fact, crowdfunding has been so successful in recent years that many small startups have bypassed traditional funding sources altogether.

Make sure you understand the different types of crowdfunding before you create a pitch. They include:

  • Donation-based crowdfunding – ask for money with nothing given in return
  • Reward-based crowdfunding – ask for donations in return for a reward
  • Peer-to-peer crowdfunding – cut out the middleman and borrow money directly from investors
  • Securities-based crowdfunding – investors are given a share in the business in return for cash

Angel Investors

Angel investors are people with a lot of experience and significant capital to spare. They look for embryonic businesses that show a lot of promise. In return for capital, the investor is given a share of the business or the promise of a decent return on their investment.
One advantage of securing funding from an Angel Investor is that you can tap into their experience in the early days of running your business. After all, they have a vested interest in ensuring your venture is a success!

Lastly, don’t dismiss the notion of asking friends and families to contribute to capital if they can afford it. If they say no, consider whether your business idea is worth pursuing.

5 Common Finance Mistakes to Avoid for Small Businesses

/in /by

StrategyDriven Managing Your Finances Article |finance mistakes|5 Common Finance Mistakes to Avoid for Small BusinessesDid you know 82% of businesses fail due to cash flow and cash management problems?

This can be due to a lack of planning or trying to DIY your finances and making business finance mistakes you cannot overcome. While this is a staggering statistic that may leave you feeling overwhelmed, you can use it to make better financial choices and give your business a fighting chance at success.

If you are a small business owner who wants your business to succeed, here are several financial mistakes you should avoid making.

1. Not Having a Financial Plan

When starting a business, one of the most important things you can do is create a financial plan. This is the part of your business plan details the financial side of your business. Creating a financial plan will help you know if your business idea is viable or not so starting with this plan is essential.

2. Not Following a Budget

If you don’t have a budget or are not following a budget, you can spend more than your business brings in and experience cash flow problems.

Because there are many common business expenses, creating a business budget is as simple as detailing your income sources and determining your fixed, variable, and one-time expenses. Following a budget is the easiest way to take control of your business finances.

3. Getting Into Business Debt With No Repayment Plan

For many small businesses, having debt is necessary to start and run your business. The problem comes when you have several forms of debt with no viable way to repay it. Never take on more debt than is necessary and always have a reasonable, short-term repayment plan.
If you are overwhelmed with debt, search “how does debt relief work” to learn about debt consolidation.

4. Ignoring Your Business Credit Score

Like your personal credit score, your business credit score is an instant indicator to lenders and investors of how well you manage your business finances. Having a good business credit score can be the difference between receiving funding to grow your business and being denied.

It’s important to maintain a great business credit score so you can have another option for funding your business.

5. Combining Your Personal and Business Finances

A common mistake many small business owners make is combining their business and personal accounts. This is dangerous because a misstep with your personal finances can negatively affect your business reputation and vice versa. It can also make your business and personal taxes difficult to figure out.

Separate your business and personal finances from the start to avoid the headaches that are sure to come if you don’t.

Avoid These Finance Mistakes to Have Business Success

These are the common business finance mistakes that result in failure.

Start with a plan and a budget to manage your business finances. Avoid unnecessary debt as this will put your small business in danger of failing.

Don’t ignore your tax planning, keep your personal and business finances separate, and make sure to maintain a good business credit score. Create an emergency saving account so you can stay afloat during difficult times.

Don’t forget to browse our site for all of your traveling needs.