Some people make the decision to give up work completely when they are diagnosed with cancer. This allows them to focus on their health and other aspects of their lives such as friends and family.
If you decide to close your business, speak to a financial adviser and take the time to think through your options. Depending on your situation, you may be able to sell the business or transfer the ownership.
If your business is struggling
Some people may wish to continue their business, but despite their best efforts, it may start to fail. If you know your business is failing, you may want to close it down yourself before you are forced to.
It may take months to close a business fully. You will need to think carefully about the effect this will have on your finances. Consider the money you will receive from other sources such as a pension, savings, shares or benefits.
Unfortunately, if you wish to keep your business going and it continues to fail, there are a range of potential outcomes that you may need to consider.
If you have a limited company which owes suppliers or lenders money that it can’t pay, it may be forced into insolvency. An appointed person (a liquidator) will take control of your business and sell the assets in order to pay the debts. This process is called winding up.
If you are a sole trader or part of a partnership, you can be forced into bankruptcy. In Scotland, this is called sequestration.
If your business is struggling, you can get free and confidential advice from Business Debtline. They cover all regions in the UK.
Writing a plan
Writing a plan that outlines everything you need to do can help you protect your personal assets and reputation.
Your plan should include:
- Collecting all money owed to you. You could offer a discount for immediate payment. Do this before you notify your customers or clients that you will be closing your business. You will find it difficult to recover debts later.
- Selling any remaining stock – consider a clearance sale.
- Telling your creditors. This includes suppliers, banks and anyone else you owe money to.
- Telling your customers and dealing with outstanding obligations. Return monies for products not delivered or services not rendered. You may be able to claim on your business or professional insurance if you can’t fulfil a contract.
- Giving your landlord the required amount of notice to terminate your lease.
- Giving notice to any employees and following regulations to ensure they are treated fairly.
- Paying your company debts as far as possible – a financial adviser can tell you about the best way to do this to protect yourself.
Other financial and legal steps
If you are a sole trader, you must inform HM Revenue & Customs (HMRC) straight away that you are closing. This may also help your finances. If your income will be lower, you may be able to reduce your tax payments. There is helpful information about what you need to know about tax when you stop trading.
If you are trading as a limited company, the process of closing your business will depend on whether you can pay your company debts. Visit gov.uk/closing-a-limited-company for further guidance. While your company is being wound up, it must still file and pay tax returns. There is useful information on nibusinessinfo.co.uk for businesses in Northern Ireland.
It is important to speak to a financial adviser to follow the correct process. This can differ depending on whether you are a sole trader, a partner in a business or a director of a limited company.
If you are registered for VAT or employ staff, you will have extra responsibilities. This may include making redundancies. In England, Scotland and Wales, Jobcentre Plus can advise you if you need to make redundancies, or you can visit gov.uk/staff-redundant/getting-help In Northern Ireland, visit nibusinessinfo.co.uk/content/redundancy-options or contact the Labour Relations Agency.
It is a good idea to ask a professional, such as an accountant, to guide you.
Deciding to give up your business is a big step. If work has been a major focus in your life, it can be difficult to adjust. It may help to talk to someone about your feelings. This could be a family member or a friend. Some people find it easier to talk to a counsellor. You may be able to contact a counsellor through the hospital, your GP, or a cancer support group.