Financial planning for business owners often revolves around the all-important exit from the company.

Whether it’s knowing how much you need to sell for to live your desired lifestyle, or creating a succession plan for your family, this milestone is a significant moment in any entrepreneur’s life.

Read more: 3 helpful things business owners should think about when selling up

One of the most common strategies that many individuals will use is to simply wind up their company entirely.

Yet despite this being a prominent choice, many business owners are unsure what’s actually involved in winding up their limited company.

So, find out what you need to know if you intend to wind up your company when you’re ready to retire.

Legally liquidating your limited company

When you wind up a business, you are legally liquidating it. That means removing it from the Companies House register, and ensuring that all its affairs have been appropriately sorted.

Generally speaking, there are three types of liquidation. The right type for you will partially depend on your intention for closing the business – that is, whether you are choosing to wind up the company, or you must because you owe money to your creditors.

The other factor is whether the business is solvent (the value of its assets exceeds its debts) or insolvent (debts exceed assets).

Together, these two aspects will combine to help you decide which of the following three types of liquidation will be most relevant to you:


  1. Members’ voluntary liquidation – In this case, the business is solvent, and you are making an active choice to close it.
  2. Creditors’ voluntary liquidation – The business is insolvent, so you involve your creditors when liquidating it.
  3. Compulsory liquidation – Again, your business is insolvent, and so you apply to the courts to liquidate it.


If you’re looking to liquidate your business ahead of retirement, you are most likely looking at members’ voluntary liquidation. So, we’ll focus on the process for this type of liquidation below.

Remember: the process will be different if your business is insolvent and facing creditors’ voluntary or compulsory liquidation.

Making a declaration of solvency starts the members’ voluntary liquidation process

Carrying out members’ voluntary liquidation essentially happens in two stages: signing a “declaration of solvency”, and then agreeing to the resolution in a general meeting with shareholders.

Signing the declaration of solvency

The first step in members’ voluntary liquidation is to make a declaration of solvency. If your business is in Scotland, you will need form 4.25 (Scot) from the Accountant in Bankruptcy.

This form must be signed by the majority of directors, witnessed by a solicitor or notary. It will also require basic information, such as the name and address of the business, and the names and addresses of all company directors.

As part of this application, you and your fellow directors need to have assessed that the company is capable of paying off its debts. You will also need to include how long it will take for the company to pay off these debts – this must be within 12 months of the company being liquidated.

A general meeting with the shareholders

After the declaration form has been signed, you will have to call a meeting of shareholders to pass a resolution for voluntary winding up. This must happen no more than five weeks after signing.

You will need to appoint a liquidator at this meeting who will be responsible for winding up the company. You must also advertise your resolution in the Gazette – the official journal of public record – within 14 days.

Once the resolution is passed, you must send your signed declaration form to Companies House within 15 days – or to the Accountant in Bankruptcy if you’re in Scotland.

Interacting with liquidators and accessing the value of the business

You (and your fellow directors, if you have any) will no longer control the company when a liquidator is appointed. As a result, you cannot act for or on behalf of the company, nor will you yet be able to access the value contained within it.

The liquidator will handle the processes of winding up the company, from settling disputes, contracts, and debts, to paying costs and the final VAT bill.

You will need to hand over all assets, records, and paperwork to the liquidator, and provide any information they ask for. They may also ask to interview you or the other directors, which you will be obligated to do.

Once this process is complete, the remaining value of what’s left can then go to the shareholders. This may be just you, or could involve other directors who owned a portion of your business.

As the company’s bank account will have been frozen when you filed the petition to wind up the business, you must apply for a validation order and attend a hearing with a registrar or district judge.

If successful, you can then give the bank a copy of the application and access the money in the account.

Ensure that winding up your company is the most suitable option

Before you decide to wind up your company, it may be worth considering whether this is the most suitable option for you.

There are various options for moving on from your business without winding it up, including:


  • Passing the reins to a family member
  • Appointing another trusted individual who understands the business, such as someone you’ve trained, to take on your role
  • Selling to an outside buyer.


Rather than liquidating the company’s assets, you may prefer one of these options. You may be able to sell your shares to a new owner, or even hold onto them and retain some control over the direction of your company in future.

Make sure that liquidating is the right option for you before you proceed, as you and any other company directors will lose all control of the company and its assets once a liquidator is appointed.

Get in touch

If you’d like help managing your money with retirement in mind as a business owner, please get in touch with us at Cordiner Wealth.

Email or call 0113 262 1242 today to find out how we can help you.

Please note

This blog is for general information only and does not constitute advice. The information is aimed at retail clients only.

All contents are based on our understanding of HMRC legislation, which is subject to change.