How Can You Afford to Liquidate Your Business?
If you are thinking of liquidating your business, then you are not alone. Every year, several companies decide to liquidate their businesses; however, trying to liquidate your business cheaply may prove to be a challenge for some organizations.
Moreover, trying to liquidate your business with no funds may prove to be even more challenging. However, there are certain steps that you can take that may help you liquidate your business cheaply and with minimal effort, as we shall see below.
The Hard Truth
In reality, trying to liquidate your business cheaply can be a challenge, as placing a company into liquidation still requires some capital. If you are worried about the costs that may be incurred in liquidating your business, then we would suggest that you make an appointment with an insolvency practitioner or with an accountant.
By doing so, you will be able to determine if you need to liquidate the business formally or if you can dissolve your business and file a formal application to have your enterprise struck off. Also, please take the time to file all the necessary paperwork carefully, as you will need to ensure that everything is done correctly if you decide to take the dissolution route.
Your hard work and diligence will likely pay off, as dissolving a business will ensure that you won’t have to go through the formal liquidation process involved in shutting down a business, which will likely save you a lot of money in the end.
However, if your company is struggling to make ends meet and is unable to pay back all of its creditors, then you may have no other choice than to file for a formal insolvency liquidation, which will require the mediation of an insolvency practitioner.
How a Creditors’ Voluntary Liquidation Works
Taking the creditors’ voluntary liquidation route is fairly common in the business world. It can be taken by a limited company that wishes to close its doors, especially if it is unable to pay off its debts.
It should also be noted that it is the business’s directors that will decide as to whether or not to file for a voluntary creditors liquidation. This is in stark contrast to a compulsory liquidation, which is usually forced upon a struggling business by its creditors.
We would recommend that you take the voluntary liquidation path if you feel that you will be unable to pay back your creditors and are struggling in other key financial areas.
In the short-term, the costs involved in filing for a voluntary creditors liquidation will cost more than sitting back and waiting for your creditors to file for compulsory liquidation. This is because you will be required to pay the liquidator’s fees if you take the voluntary route.
By doing so, you will be in control, which will not only reduce your level of stress in the short-term but also result in lower overall costs in the long-term. In fact, merely waiting for your creditors to make the first move can prove to be disastrous, as your company may end up being investigated for fraudulent trading or other forms of malfeasance, which may result in additional legal fees and costs and possible penalties as well.
De facto, if found guilty, then you may be held personally responsible for the charges, which will make you personally liable for all of the money that your business owes.
Shop Around To Find the Best Rates
The fact of the matter is every insolvency practitioner will charge different rates, so we would suggest that you shop around and compare their fees. By doing so, you will have more leverage when deciding on which insolvency practitioner to choose.
Once you have selected your insolvency practitioner, you should have a candid conversation with them to determine the likely costs that will be incurred, as well as what their unique fee structure is.
For instance, you may discover that your practitioner charges varying fees that are determined on a case by case basis. Or, they may charge a fixed-rate regardless of the case in question.
The good news is most insolvency practitioners are well aware that they have many competitors and will be willing to negotiate with you to benefit both parties. For example, they may agree to cap their fees after a given level has been reached so that there are no unexpected fees to worry about after the liquidation process has been finalized.
Finding Common Ground
If you decide to be a part of the liquidation process then the work in progress and the trade that are a part of your enterprise may also be sold, in addition to your corporate assets. It should also be mentioned that if you happen to be selling to a trade buyer, and are willing to work with them after the sales have gone through for a smooth handover, then your trade buyer may be open to covering some of the costs that are involved in the liquidation process themselves; which will save you some money in the process.
You can also try raising some money by either taking the personal finance route or by selling off some of your personal assets. For instance, you can sell your car or trade-it in for an older model. Or, you can take fewer or shorter vacations to save more money. Finally, if your credit score is solid and your circumstances allow for it, you may be able to raise finance in the form of a credit card of a personal loan.
If you would like to learn more about the different ways to liquidate your business, call Michael’s Global Trading at 888-471-5066 or contact us here.