![](https://f-ndr.com/wp-content/uploads/2022/02/Umbrella-Company-1920x700px-1024x373.jpg)
As a contractor that’s been forced to move away from operating a Limited Company, towards using an Umbrella Company, it’s often not by choice that you would want to close your Limited Company.
The first choice of many is therefore to keep their Limited Company and make it dormant (where it doesn’t trade) in order to preserve it for when they find a contract deemed outside IR35.
In some instance though it is highly unlikely to be the case (for example you work in the public sector) and as such closing your company is the best route to take, simply to save yourself the burden of accountancy costs.
There are three main ways to close your personal services company in this scenario.
- By far the cheapest method of closing your Limited Company is through dissolution – If you have no creditors, debtors or assets, you can make the company dormant for 3 months and then apply to have the company dissolved using a DS01 form or by applying for dissolution online.
- If you have debtors, or assets within the company, and can pay off your creditors, then you will need to follow the formal liquidation process for a solvent company. This is called a Members’ Voluntary Liquidation.
- If you have creditors that you cannot pay off before liquidating then you will need to follow the formal liquidation process for an insolvent company. This is called a Creditors’ Voluntary Liquidation. This is a common route taken by anyone with an overdrawn directors loan account.