Closing your business
When you decide to sell or close your business, there are several important considerations you need to make.
These include finalising tax issues with Revenue, meeting your responsibilities to your employees and suppliers and informing the Companies Registration Office.
By understanding and fulfilling your legal obligations, you can ensure a fair and legal process when closing your business.
This page gives a summary of information on these issues. It covers both stopping self-employment and closing or selling a company. We have provided links to more detailed information to help guide you through the process.
If you are self-employed
If you are self-employed as a sole trader, the process is you simply stop trading and tell your clients and suppliers that you are no longer in business. You must retain financial and other records for 6 years following closure.
Notify the Companies Registration Office
Finalising your taxes
You can cancel your tax and VAT registration with Revenue by either:
- Using the ‘Manage Tax Registrations’ function in ROS
- Filling out a Tax Registration Cancellation Notification (form TRCN1)(pdf) and sending to your local Revenue office
If you sell or get rid of business assets, like buildings or equipment, you may have to pay Capital Gains Tax on the profit you make (if any).
If you owe debts with creditors, you are responsible for paying those debts. You can find out more information about dealing with problem debt.
Closing a company
There are different things to consider if you want to sell or close a limited company. Usually, you need the agreement of the company’s directors and shareholders.
The way you close the company depends if it’s a voluntary liquidation or and involuntary liquidation.
A voluntary liquidation usually doesn’t involve the courts. Members or creditors (or both) are more involved in winding up of the company.
An involuntary liquidation supervised by the High Court. The court chooses a liquidator to act on its behalf.
Voluntary liquidation (windup)
If your business is a company, you may want to close because of retirement or another personal reason.
Liquidation is the process of closing a company so that it no longer exists. The company’s assets are used to pay its debts. A liquidator is appointed to close the company.
What does a liquidator do?
When a company is in liquidation, the liquidator usually takes over the directors’ powers. The liquidators main role is to:
- Sell the company’s assets
- Pay off its debts
- Distribute any remaining funds to the company’s members
There are 2 types of voluntary liquidation:
|Situation||Type of liquidation||How it works|
|The company is able to pay its debts (solvent)||Members’ voluntary liquidation||
A member is someone who has invested in the company, is officially registered as a member, and has certain rights.
To start the process, a majority of the company's directors must make a declaration of solvency. This means that they have thoroughly examined the company's affairs and believe that it will be able to pay off its debts within a specific timeframe.
Once the declaration of solvency is made, a liquidator is appointed by the members and oversees the process of selling assets, settling debts and distributing any surplus funds.
|The company is unable to pay its debts (insolvent)||Creditors’ voluntary liquidation||
The members of the company decide to initiate a creditors' voluntary liquidation.
The directors must arrange a meeting of the company's creditors. You must give at least 10 days' notice to all creditors, informing them of the meeting. During the meeting, the creditors will have the opportunity to appoint a liquidator, who will oversee the liquidation process.
The liquidator will sell the company's assets and use the proceeds to pay off its debts to the creditors, in line with relevant legislation.
Involuntary liquidation (insolvency)
When a company is forcibly closed by the court, this is called an involuntary liquidation.
This process can be started by a creditor, a member of the company, or in some cases, the Minister for Enterprise, Trade, and Employment. In this process, the court appoints a liquidator to oversee the winding up of the company.
When is a receiver appointed?
A receiver may be appointed either by the court or by a lender when enforcing a loan agreement.
The role of the receiver is to take control of the company's assets that were used as security for the loan, such as a mortgage on property. The receiver is responsible for selling these assets on behalf of the lender.
When is an examiner appointed?
If a company's financial health is deteriorating but it still holds potential to be viable, the court can appoint an examiner. The examiner assesses the company's situation and develops a rescue plan that aims to save the company.
For more detailed information you can read the information booklet (pdf) published by the Office of the Director of Corporate Enforcement. There are lists of insolvent companies in liquidation on the website of the Office of the Director of Corporate Enforcement.
Your responsibilities to employees
When closing your business, it is important to consider your responsibilities to your employees. The law provides certain protections for employees when a business closes or is transferred. This includes rights around redundancies, insolvency payments, and collective redundancies.
Staff redundancies when a business closes
If you need to make some of your employees redundant due to financial difficulties or a reorganisation, you must follow fair procedures.
- Using fair selection criteria
- Giving employees at least 2 weeks' notice
- Paying the statutory redundancy payment on the date of dismissal.
If you do not follow fair procedures, this can result in claims of unfair dismissal from your employees.
Insolvency Payment Scheme
If your company becomes legally insolvent, the Insolvency Payments Scheme can pay certain outstanding entitlements to your employees.
This includes arrears of wages and sick pay, outstanding holiday pay, unpaid minimum notice, and certain arrears of pension contributions. However, there may be limitations and conditions that apply.
If your company is planning to make collective redundancies, you have certain obligations. You must give specific information regarding the proposed redundancies to employees' representatives and enter into consultations with the aim of reaching an agreement.
These consultations must take place at least 30 days before issuing the redundancy notice.
Employees during a transfer of business
If your business is taken over by another company through a legal merger or transfer, it is important to know that your employees’ have rights that are protected by legislation.
The European Union has created regulations that safeguard employees' rights during the transfer of undertakings. Under these regulations, the new employer is obligated to take on the existing employees of the business. You can read more about the transfer of business.
You can get detailed information on closing a business from the Companies Registrations Office (CRO). The website of the Office of the Director of Corporate Enforcement has useful information booklets and quick guides.