Q: My partner and I have been in business for nearly four years now, and it’s been a struggle. On the bright side, though, we’ve developed a completely new idea for a business in the online space, and we think it’s got a lot of potential.
We’re registered as a limited company, and retail under a trading name. We’ve managed to file all our paperwork with the revenue on time and accurately, and we have very few liabilities – we reckon that shifting our remaining stock would take care of them easily enough.
We’re wondering, though, whether we’re better off closing down our company and starting a new one to pursue the new idea, or whether we should simply carry on and register a new trade name for the online business. What’s your advice?
A: Even though you’re fortunate to have very few loose ends from the past four years of business, I’d be inclined to tie them up now by shutting down your company and starting a new one.
For starters, transitioning to a completely new business may not be as simple as registering a new trade name. Depending on the articles of association and other paperwork that you filed with the Companies Registration Office (CRO) when you first set up, you may need to replace these with ones that reflect the new nature of your business. This could eliminate the major advantage of carrying on with the existing limited company – a lack of paperwork.
There are several advantages to starting the new limited company as well – no corporation tax for three years, and the possibility of raising funds through the Employment and Investment Incentive Scheme (EIIS) if you need. While you can raise funds with a mature company through this scheme, you’d need to show that you have extra staff, and attracting investors is generally easier with a fresh, uncomplicated business plan. Several banks also offer free banking services for a time to new start-ups. Moreover, you don’t have to worry about a Revenue audit going back years. For these reasons, I believe it’s worth the hassle to start a new company.
When shutting down your old company, if you’re able to dispose of your assets and settle liabilities neatly, I’d suggest going for a member’s voluntary strike-off. This option is available to business owners when nobody is left out of pocket by winding down the firm: it involves far less paperwork and cost than the formal liquidation process.
It always helps to have experienced advice when you’re shifting your business focus, and we help many firms through the liquidation or strike off process. We also offer company formation services to many new firms, and assistance securing investment. Give us a call today to talk about your options.