A cautionary tale for contractors and freelancers.
If you are between contracts,, or back in permanent employment for a while, then its tempting to close your Personal Service Company down to save on costs like accounting and bank charges, and to cut down on admin.
No one could blame you… however…
One of our clients did just this recently, then went back to contracting. He asked us to set up a new company for him and through no fault of ours or his it took several weeks to open a bank account, and hence he couldn’t get paid. Its fair to say he was a little bit stressed over this.
He was, perhaps, unlucky, as three banks messed him around, however it raises the point that closing a company down isn’t always the best option. Yes, it saves costs and admin, but it can be a herculean task to start over again, and also if you are tying to demonstrate a business entity for IR35 then closing and reopening will strongly mitigate against that.
So, its worth thinking through all implications. Sometimes closing down is right, but don’t rush into it.