How to Close or Dissolve a Company

Last Updated: Mar 18, 2021
post featured image

There are lots of different reasons why a business may fail or cease to trade and most of the top entrepreneurs and business leaders in the world have a list of tried and failed businesses behind them. In some cases, however, the business owner may take the decision to voluntarily close the business. This may be because the business idea didn’t turn out quite as profitable as was expected or predicted, leaving forecasts for returns severely lacking.

Closing down a registered business isn’t a decision to be taken lightly and a chat with your business accountant is one definite step to take to weigh up every option open to you before you make that final decision. But if you do decide that closing or dissolving your company is the best option to take, here is how you can do it.

What does dissolving a company mean?

Dissolving a company is termed as ‘dissolution’ or ‘striking off’ and means that you are removing the official registered name of your limited company from the register of companies held by Companies House. Once the company name is removed from this register, it officially no longer exists.

Many people often mix up dissolving a company with liquidation. Dissolution is completely different from liquidation. Dissolving a company is done when there are no debts owed by the company, or any debts that do exist can be easily paid off and settled in full before the company is dissolved. Liquidation is the method used when the company has severe debts that it is unable to pay off in any form. Liquidation takes the assets of the company and sells them off using the money raised from the sale towards paying off any outstanding debts. This can sometimes mean that the outstanding debts can be cleared, but in some cases the debts owed can outweigh the value of the assets, so there will be some losses incurred.

The legal stuff

The process of closing or dissolving a company comes under Section 1003 of the Companies Act 2006. To do this, you must meet the following criteria:

  • The company hasn’t traded in the last three months

  • The company name hasn’t changed in the last three months

  • There are no ongoing legal proceedings or any proposed against the company

  • There has not been a disposal for value of property or rights

There are also a series of responsibilities that you have as the company owner that must be met before you can dissolve the company. These include ensuring that assets are distributed among your company shareholders, something that needs to be done before applying for dissolution otherwise any assets remaining become Bona Vacantia and will automatically pass to the possession of the Crown.

Before you officially dissolve your company, you need to make sure that your staff are paid their final wage and any redundancy packages are finalised and put into place. You also need to ensure you have paid off any outstanding financial necessities such as Corporation Tax, National Insurance, PAYE and other tax liabilities you have beforehand. Your company accounts and tax returns should be with HMRC then you can ask them to close the payroll scheme for your company and deregister it for VAT. Finally, once you have completed all these steps and paid out everything your company owes, you can then close down the company bank accounts.

How to do it

Once you have gone through your checklist and you know your company complies with all these legal stipulations, the application for dissolution can then be made. The act of dissolution needs to be done by the majority of the Directors of the company and the whole precess from start to finish usually takes around three months to complete.

In order to start the process of dissolution, you need to complete the form DS01 – Striking Off Application. The cost of doing this is just £10, and you must ensure your company meets with all the above criteria for the application to be accepted. The striking off request will then be published in the Gazette in London, Edinburgh or Belfast, depending on where your company is located.

If no one comes forward to raise an objection to the dissolution, then the company will be struck off the register within three months. A second notice is then published in the same Gazette to confirm this has happened and at this point, the company officially no longer exists.

However, anyone can object to the dissolution of your company, for example, if your company owes them money. Should their objection be a valid one and be upheld by the Registrar, then the dissolution process will be stopped. A creditor can also apply to court to have your company restored after dissolution if you haven’t settled your outstanding debts with them. This is why it is so important that you make sure all debts are cleared before the whole process begins.

Don’t do business alone. Join a Community.

Subscribe to our newsletter and join the ranks of 100,000+ entrepreneurs who receive weekly insights, legal updates, and compliance reminders directly in their inbox.

Other options to dissolution

In most straightforward situations where companies carry no debts and there is no need to consider reopening the company further down the line, then dissolution can be the best option. However, there are other options available to you in more complicated situations that might work better than choosing this route. For example, instead of dissolving your company, you can register the company as dormant which allows you to open the company back up at a later date. As long as you are not actively trading with this company, this could be good option where you can shelve your company until you are in a better position to use it. Another alternative would be a member’s voluntary liquidation (MVL). This might be another option if you can’t settle debts immediately but can do it within a twelve month period.


Closing or dissolving a company doesn’t mean that you can’t then start another company under a different name in the future. The lessons learned from this company will often help you in your new venture and aid in a better outcome going forward.

Further reading:

How to make your Limited company dormant

What is company liquidation?

Article by


Submit a Comment

Your email address will not be published. Required fields are marked *