Closing your business
You or your shareholders may look to close or sell your business for a variety of reasons.
There are many issues you will need to consider when selling or closing your business including finalising tax issues with Revenue, your responsibilities to your employees and suppliers and informing the Companies Registration Office.
This page gives you a summary of information on these issues. It covers both stopping self-employment and closing or selling a company. We link to more detailed information to help guide you through this process.
If you are self-employed (a sole trader), the process is quite straightforward. You simply stop trading and tell your clients and suppliers that you are no longer in business. You need to retain financial and other records for 6 years following closure.
Notifying 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, or
- Filling out a Tax Registration Cancellation Notification (form TRCN1)(pdf) and sending to your local Revenue office
If you sell or dispose of business assets (for example buildings or equipment) you may also need to pay Capital Gains Tax on any capital gains (profit) you make.
If you owe debts to creditors, you are personally responsible for those debts.
Closing a company
There are different things you need to consider if you are selling or closing a limited company. You usually need to have the agreement of your company’s directors and shareholders.
The way you close the company depends on whether it is:
- A voluntary liquidation (windup), or
- Involuntary liquidation (insolvency)
The main difference between the two is that an involuntary liquidation is undertaken under the supervision of the High Court. The court appoints a liquidator to act on its behalf. A voluntary liquidation does not usually involve the courts and members or creditors (or both) play a more active role in the winding up of the company.
Voluntary Liquidation (windup)
If your business is incorporated as a company, you may want to close it due to retirement or another personal reason.
Liquidation is the process of winding up a company so that it no longer exists, by using its assets to pay its debts. A liquidator is the person appointed to wind up the company.
When a company is in liquidation, the liquidator usually takes over the powers of the directors. The liquidators main role is to:
- Dispose of the company’s assets
- Pay or settle its debts
- Distribute any surplus to its members
There are 2 types of voluntary liquidation as follows:
|Type of liquidation
|How it works
|The company is able to pay its debt
|Members’ voluntary liquidation
|The members of the company that can pay its debts decide to wind it up. A member is a person who participates in the capital of a company, is registered as a member and is entitled to certain rights.
A majority of the business directors must make a declaration of solvency.
This declaration means that they have enquired into the affairs of the company and believe that it would be able to pay its debts within a certain period.
|The company is unable to pay its debts when they are due
|Creditors’ voluntary liquidation
|The company summons a meeting of the creditors. You must give 10 days' notice of the meeting to all creditors.
A liquidator is appointed to realise assets and settle debts with various creditors in line with legislation.
Involuntary Liquidation (insolvency)
Involuntary liquidation means that a company is wound up by the court. Involuntary liquidation is usually initiated by either a creditor or a member of the company. In some circumstances, the Minister for Enterprise, Trade and Employment can order an involuntary liquidation. The court appoints the liquidator and supervises the liquidation process.
Appointment of a receiver
A receiver may be appointed by:
- The court
- A lender, when a loan agreement is being enforced
The receiver is appointed to take control of the assets of the company that have been used to secure a loan, such as a mortgage. Where a loan is secured on certain company assets, the receiver sells these assets on behalf of the lender.
Appointment of an examiner
If a company goes into examinership, it means that the company's financial health is failing, but that the company is still potentially viable. The Court can appoint an examiner to assess the company’s position and prepare a rescue plan for the company.
You can find more details in this 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.
Responsibilities to your employees
Your employees’ rights are protected in law when your business closes or is transferred.
If you are in financial difficulties or you are reorganising your firm you may need to make some of your employees redundant. All eligible employees are entitled to a statutory redundancy payment when they are made redundant.
You must make sure that you follow fair procedures, including:
- Fair selection criteria
- Giving the employee at least 2 weeks’ notice
- Paying the redundancy payment due to the employee on the date of dismissal.
Your employees can bring a claim for unfair dismissal if they think that they were unfairly selected for redundancy or that a genuine redundancy situation did not exist.
Insolvency Payment Scheme
The Insolvency Payments Scheme pays certain outstanding entitlements to your employees, where the company becomes legally insolvent. Your employees can claim for arrears of wages and sick pay, outstanding holiday pay, unpaid statutory minimum notice and certain arrears of pension contributions. Some limitations and conditions apply.
If your company is planning collective redundancies, you must:
- Provide the employees' representatives with specific information regarding the proposed redundancies
- Enter into consultations with a view to agreement with the employees' representatives
The consultations must take place at least 30 days before the notice of redundancy is given. The aim of the consultation is to consider whether there are any alternatives to the redundancies. The law covering collective redundancies is the Protection of Employment Acts 1977-2007. The requirement to consult on collective redundancies is set out in the Employees (Provision of Information and Consultation) Act 2006.
Transfer of business
If your business is taken over by another employer as a result of a legal merger or transfer, the rights of your employees are protected by legislation.
The European Union has created regulations to safeguard employees' rights on transfer of undertakings. Under the Regulations the new employer is legally obliged to take on the existing employees of the business.
Last Updated: 8th July 2021