Fresh start ..

[GEKKO]

..i run a business ( sole trader ) and have done for 17 years .

My accountant has produced my third set of bad books and says i should have a fresh start ,wind up the business by closing the door ,and form a ltd company .

The building i work from (an old church ,value £110,000 ) and stock @ £5,000 are my assets .With debts to bank of £31,000 and suppliers of £6,000 ..........any help would be help indeed

 

[bwglaw]

Gekko

I am not an accountant so cannot give any advice on tax matters. However, I can look at the legal issues.

First of all, you state you are a sole trader. You are responsible for all liabilities. I am not sure if the advice from the Accountant is a good one because even if you 'close your door' you are still personally liable for the liabilities as a sole trader.

You cannot wind yourself up unless you are a Ltd Company, you can however, declare yourself bankrupt. Declaring yourself bankrupt has to be thought through carefully because this can affect you in obtaining credit or becoming a Director of a Ltd Company, which appears to be what your Accountant has advised. Suppliers/creditors can still pursue a claim for any debt against you personally and recover any debt by liquidating any of your personal assets, including your home if you own one.

Your liabilities do not appear to be bad but this depends on your turnover. The amount of your turnover will affect your decision whether to close the business. You said you work from an old Church - do you actually own it? Is the debt to the bank the mortgage of the Church or is it some other debt? If you own the Church would selling the Church clear your liabilities in order to maintain a clean credit history?

To conclude, I think a second opinion from an Accountant may be in order before taking such a serious step.

 

[top-click]

Hi GEKKO,

What sort of help are you after?

Rob

top-click

 

[BMS]

I would be happy to take a look at you accounts.

As handsongroup suggests if you walk away from the business then you are unlikely to be able to start up again as a limited company.

 

[Ozzy]

Hi GEKKO,
The figures you mention seem in your favour, even if it does mean maybe losing the church, but as mentioned above get a second opinion before making such a huge decision.

 

[GEKKO]

thanks for all your relies ,

..the old church i work in i do own ,the money owed to the bank is for BDL'S etc and treated as a mortgage .

Im going to see my accountant again to say i intend to carry on and fight through the difficult trading period ,it would kill me to sell the building i have improved over 17 years and to "walk away " is not the way

thanks again ,great site ,and to BMS thanks ,i will contact you after speaking to my accountant this week

GEKKO

 

[Rob Holmes]

Im going to see my accountant again to say i intend to carry on and fight through the difficult trading period ,it would kill me to sell the building i have improved over 17 years and to "walk away " is not the way

Good for you Gekko.

I've PM'd you too.

Rob

 

[Alpha]

Gekko

Firstly seriously consider changing accountant with advice like that!!!


As handson rightly points out there is no fresh start as you are personally liable for all your debts.

Changing over to a limited company will NOT improve your business. It will cost more in accountancy and company secretarial fees and is unlikely to offer you much shelter from running up debts eg loans would probably only be given if you sign a personal guarantee (meaning you are still personally liable even if the company is closed down)

There is potentially more administrative hassle as well eg payroll(possibly ) depending upon your remuneration strategy and remeber all the money generated belong initially to the company not you. If you take over £5k out in for example directors loans there will be subsequent tax implications.


Finally if you had three years of bad results i'm afraid that becoming limited will do absolutely nothing to improve that.

You really need to take a good look at where your business is going wrong and address how you are going to improve that.

If you cannot see a way then really do something else.....harsh but a true fact of business life.

I wish you success in the future.

 

[Jayne]

Hi,

With house price increase, if you own your own home, you could re-mortgage to get you out of trouble. My accountant is very good his name is Darren Email [email protected]. He's in Wakefield, W.Yorkshire and isn't expensive. You can actually understand him! Also give us all some details of what you sell and if you have a web site etc. and maybe we could improve your sales and tell people about you on the net. It's crap getting in trouble with the bank, we know from experience, but we sorted it out. Keep your chin up.

Best Wishes

Jayne

 

[Julie]

Could you rent our space in the church? It sounds like a real asset to your business and, in the short term, it could bring in some extra cash to help service the debts.

Good luck, Gekko. It's horrible when things pile up like this.

julie

 

[GEKKO]

i took a week off to spend time with the people who support me without question ,( wife and 4 children )

i had a good think about everything ,and found this site .


things have started to improve and ive changed alot of things .

i cant believe the replies i've had ,and it's cleared my mind for me .

i sell and make 3 piece suites ,i dont have a web site but have one being prepared ,thank you all again

MARK

 

[annethedonn]

I love it when a plan comes together!

 

[chris1317]

Well done, hopefuly back on the straight and narrow now

Chris.

 

[Rob]

Gekko,

It's good to see someone really benefiting from the advice on this Forum. It's also encouraging to see you do what many business people don't do and that is taking time off the business to just think about the business.

As you no doubt found out, trying to formulate a plan for the future is hard when business is going on around you. Taking time out has clearly paid dividends for you.

You have mentioned your loan/mortgage. If you need some financial breathing space don't forget that some Banks/mortgage companies may allow you to lengthen the term of your loan. This will reduce your immediate outgoings but obviously will cost more in interest in the long term. The other alternative is to take a break from payments for a few months if you need to sort your finances out. The trick here though is not to get used to having no repayment to make otherwise it comes as a shock when repayments start again.

Good luck