Understanding my company's liabilities
I am seeking to close a UK business I own but I am worried about being hit with a huge tax bill.
I have been provided a balance sheet which states the following:
- TOTAL ASSETS LESS CURRENT LIABILITIES: £203,157
- CREDITORS (amount falling due after more than one year) = £172,056
- NET ASSETS £31,101
I'm thinking I will only pay tax on £31,101 ? Also what exactly are "current liabilities" and is there is a formal process for settling this ? What about the tooling and machinery I own ? Do I get to sell that off and will there be any further tax on that or is that included in my assets ?
EDIT:
There is also a net loss of £7,228 stated on another page
taxes united-kingdom assets private-company
asked 2 hours ago
Paul RyanPaul Ryan
83
New contributor
Paul Ryan is a new contributor to this site. Take care in asking for clarification, commenting, and answering.
Check out our Code of Conduct.
add a comment |
I am seeking to close a UK business I own but I am worried about being hit with a huge tax bill.
I have been provided a balance sheet which states the following:
- TOTAL ASSETS LESS CURRENT LIABILITIES: £203,157
- CREDITORS (amount falling due after more than one year) = £172,056
- NET ASSETS £31,101
I'm thinking I will only pay tax on £31,101 ? Also what exactly are "current liabilities" and is there is a formal process for settling this ? What about the tooling and machinery I own ? Do I get to sell that off and will there be any further tax on that or is that included in my assets ?
EDIT:
There is also a net loss of £7,228 stated on another page
taxes united-kingdom assets private-company
asked 2 hours ago
Paul RyanPaul Ryan
83
New contributor
Paul Ryan is a new contributor to this site. Take care in asking for clarification, commenting, and answering.
Check out our Code of Conduct.
3
Who provided this balance sheet? If it's your own accountants can you ask them for a full breakdown of the figures?
– Ganesh Sittampalam♦
2 hours ago
The accountant did also supply a profit / loss statement. I guess that's what I should have been focusing on.
– Paul Ryan
1 hour ago
If you want to close it, then IMO the assets are actually the most important thing. You'll need to get the net money out somehow and you might end up paying personal taxes at that point.
– Ganesh Sittampalam♦
43 mins ago
add a comment |
I am seeking to close a UK business I own but I am worried about being hit with a huge tax bill.
I have been provided a balance sheet which states the following:
- TOTAL ASSETS LESS CURRENT LIABILITIES: £203,157
- CREDITORS (amount falling due after more than one year) = £172,056
- NET ASSETS £31,101
I'm thinking I will only pay tax on £31,101 ? Also what exactly are "current liabilities" and is there is a formal process for settling this ? What about the tooling and machinery I own ? Do I get to sell that off and will there be any further tax on that or is that included in my assets ?
EDIT:
There is also a net loss of £7,228 stated on another page
taxes united-kingdom assets private-company
asked 2 hours ago
Paul RyanPaul Ryan
83
New contributor
Paul Ryan is a new contributor to this site. Take care in asking for clarification, commenting, and answering.
Check out our Code of Conduct.
I am seeking to close a UK business I own but I am worried about being hit with a huge tax bill.
I have been provided a balance sheet which states the following:
- TOTAL ASSETS LESS CURRENT LIABILITIES: £203,157
- CREDITORS (amount falling due after more than one year) = £172,056
- NET ASSETS £31,101
I'm thinking I will only pay tax on £31,101 ? Also what exactly are "current liabilities" and is there is a formal process for settling this ? What about the tooling and machinery I own ? Do I get to sell that off and will there be any further tax on that or is that included in my assets ?
EDIT:
There is also a net loss of £7,228 stated on another page
taxes united-kingdom assets private-company
taxes united-kingdom assets private-company
asked 2 hours ago
Paul RyanPaul Ryan
83
New contributor
Paul Ryan is a new contributor to this site. Take care in asking for clarification, commenting, and answering.
Check out our Code of Conduct.
asked 2 hours ago
Paul RyanPaul Ryan
83
New contributor
Paul Ryan is a new contributor to this site. Take care in asking for clarification, commenting, and answering.
Check out our Code of Conduct.
edited 1 hour ago
Paul Ryan
asked 2 hours ago
Paul RyanPaul Ryan
83
New contributor
Paul Ryan is a new contributor to this site. Take care in asking for clarification, commenting, and answering.
Check out our Code of Conduct.
asked 2 hours ago
Paul RyanPaul Ryan
83
asked 2 hours ago
Paul RyanPaul Ryan
83
83
New contributor
Paul Ryan is a new contributor to this site. Take care in asking for clarification, commenting, and answering.
Check out our Code of Conduct.
New contributor
Paul Ryan is a new contributor to this site. Take care in asking for clarification, commenting, and answering.
Check out our Code of Conduct.
Paul Ryan is a new contributor to this site. Take care in asking for clarification, commenting, and answering.
Check out our Code of Conduct.
3
Who provided this balance sheet? If it's your own accountants can you ask them for a full breakdown of the figures?
– Ganesh Sittampalam♦
2 hours ago
The accountant did also supply a profit / loss statement. I guess that's what I should have been focusing on.
– Paul Ryan
1 hour ago
If you want to close it, then IMO the assets are actually the most important thing. You'll need to get the net money out somehow and you might end up paying personal taxes at that point.
– Ganesh Sittampalam♦
43 mins ago
add a comment |
3
Who provided this balance sheet? If it's your own accountants can you ask them for a full breakdown of the figures?
– Ganesh Sittampalam♦
2 hours ago
The accountant did also supply a profit / loss statement. I guess that's what I should have been focusing on.
– Paul Ryan
1 hour ago
If you want to close it, then IMO the assets are actually the most important thing. You'll need to get the net money out somehow and you might end up paying personal taxes at that point.
– Ganesh Sittampalam♦
43 mins ago
3
3
Who provided this balance sheet? If it's your own accountants can you ask them for a full breakdown of the figures?
– Ganesh Sittampalam♦
2 hours ago
Who provided this balance sheet? If it's your own accountants can you ask them for a full breakdown of the figures?
– Ganesh Sittampalam♦
2 hours ago
The accountant did also supply a profit / loss statement. I guess that's what I should have been focusing on.
– Paul Ryan
1 hour ago
The accountant did also supply a profit / loss statement. I guess that's what I should have been focusing on.
– Paul Ryan
1 hour ago
If you want to close it, then IMO the assets are actually the most important thing. You'll need to get the net money out somehow and you might end up paying personal taxes at that point.
– Ganesh Sittampalam♦
43 mins ago
If you want to close it, then IMO the assets are actually the most important thing. You'll need to get the net money out somehow and you might end up paying personal taxes at that point.
– Ganesh Sittampalam♦
43 mins ago
add a comment |
2 Answers
2
active
oldest
votes
Ask your accountant for a profit and loss statement for the current year. What you're showing us is is a balance sheet. You can't infer taxes from a balance sheet but you can from a profit and loss statement.
answered 1 hour ago
Koenig LearKoenig Lear
865
There is a net loss of £7,228
– Paul Ryan
1 hour ago
@PaulRyan It's unlikely you'll have to pay any corporate taxes this year. Corporate taxes are paid on profits for the year.
– Koenig Lear
1 hour ago
1
But liquidating a company involves removing its net assets, which you might be liable to personal tax on.
– Ganesh Sittampalam♦
43 mins ago
add a comment |
"I'm thinking I will only pay tax on £31,101" - since when do you pay on assets? With some very few exceptions, taxes are paid on profits. Which you say nothing about.
"Also what exactly are 'current liabilities'" - they are liabilities at the moment the snapshot of the balance is taken. Stuff like unpaid invoices (which may not be due to be paid yet, you know), stuff like open credits or mortgages that are to be paid over time.
"What about the tooling and machinery I own ?" - if those are company assets, then their value in the books (which may not be market value) would have already been included as part of total assets.
"Do I get to sell that off and will there be any further tax " - again, you pay tax on profits, regardless where they come from, as a principle. If you sell a machine for more than it is worth (in the books, as asset) then this is profit.
edited 49 mins ago
Chris W. Rea
26.5k1586174
answered 1 hour ago
TomTomTomTom
2,60321215
Re: "since when do you pay [tax] on assets?" ... the answer is: during liquidation -- potentially. On company windup, a liquidation distribution would return surplus equity (if any remains after settling liabilities) to shareholders. Such a distribution can constitute a return of invested capital, as well as retained earnings. Distributing retained earnings to a shareholder would trigger a personal tax liability. So, in theory, "assets" held by a liquidating company could become profit/income to shareholders, from their personal tax perspective. Just not if it's all return of capital.
– Chris W. Rea
32 mins ago
Actually no. Potentially and only for retained earnings, awhich I actually explicitly mention (selling assets for a higher than the book price).
– TomTom
28 mins ago
add a comment |
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2 Answers
2
active
oldest
votes
2 Answers
2
active
oldest
votes
active
oldest
votes
active
oldest
votes
Ask your accountant for a profit and loss statement for the current year. What you're showing us is is a balance sheet. You can't infer taxes from a balance sheet but you can from a profit and loss statement.
answered 1 hour ago
Koenig LearKoenig Lear
865
There is a net loss of £7,228
– Paul Ryan
1 hour ago
@PaulRyan It's unlikely you'll have to pay any corporate taxes this year. Corporate taxes are paid on profits for the year.
– Koenig Lear
1 hour ago
1
But liquidating a company involves removing its net assets, which you might be liable to personal tax on.
– Ganesh Sittampalam♦
43 mins ago
add a comment |
Ask your accountant for a profit and loss statement for the current year. What you're showing us is is a balance sheet. You can't infer taxes from a balance sheet but you can from a profit and loss statement.
answered 1 hour ago
Koenig LearKoenig Lear
865
There is a net loss of £7,228
– Paul Ryan
1 hour ago
@PaulRyan It's unlikely you'll have to pay any corporate taxes this year. Corporate taxes are paid on profits for the year.
– Koenig Lear
1 hour ago
1
But liquidating a company involves removing its net assets, which you might be liable to personal tax on.
– Ganesh Sittampalam♦
43 mins ago
add a comment |
Ask your accountant for a profit and loss statement for the current year. What you're showing us is is a balance sheet. You can't infer taxes from a balance sheet but you can from a profit and loss statement.
answered 1 hour ago
Koenig LearKoenig Lear
865
Ask your accountant for a profit and loss statement for the current year. What you're showing us is is a balance sheet. You can't infer taxes from a balance sheet but you can from a profit and loss statement.
answered 1 hour ago
Koenig LearKoenig Lear
865
answered 1 hour ago
Koenig LearKoenig Lear
865
answered 1 hour ago
Koenig LearKoenig Lear
865
answered 1 hour ago
Koenig LearKoenig Lear
865
865
There is a net loss of £7,228
– Paul Ryan
1 hour ago
@PaulRyan It's unlikely you'll have to pay any corporate taxes this year. Corporate taxes are paid on profits for the year.
– Koenig Lear
1 hour ago
1
But liquidating a company involves removing its net assets, which you might be liable to personal tax on.
– Ganesh Sittampalam♦
43 mins ago
add a comment |
There is a net loss of £7,228
– Paul Ryan
1 hour ago
@PaulRyan It's unlikely you'll have to pay any corporate taxes this year. Corporate taxes are paid on profits for the year.
– Koenig Lear
1 hour ago
1
But liquidating a company involves removing its net assets, which you might be liable to personal tax on.
– Ganesh Sittampalam♦
43 mins ago
There is a net loss of £7,228
– Paul Ryan
1 hour ago
There is a net loss of £7,228
– Paul Ryan
1 hour ago
@PaulRyan It's unlikely you'll have to pay any corporate taxes this year. Corporate taxes are paid on profits for the year.
– Koenig Lear
1 hour ago
@PaulRyan It's unlikely you'll have to pay any corporate taxes this year. Corporate taxes are paid on profits for the year.
– Koenig Lear
1 hour ago
1
1
But liquidating a company involves removing its net assets, which you might be liable to personal tax on.
– Ganesh Sittampalam♦
43 mins ago
But liquidating a company involves removing its net assets, which you might be liable to personal tax on.
– Ganesh Sittampalam♦
43 mins ago
add a comment |
"I'm thinking I will only pay tax on £31,101" - since when do you pay on assets? With some very few exceptions, taxes are paid on profits. Which you say nothing about.
"Also what exactly are 'current liabilities'" - they are liabilities at the moment the snapshot of the balance is taken. Stuff like unpaid invoices (which may not be due to be paid yet, you know), stuff like open credits or mortgages that are to be paid over time.
"What about the tooling and machinery I own ?" - if those are company assets, then their value in the books (which may not be market value) would have already been included as part of total assets.
"Do I get to sell that off and will there be any further tax " - again, you pay tax on profits, regardless where they come from, as a principle. If you sell a machine for more than it is worth (in the books, as asset) then this is profit.
edited 49 mins ago
Chris W. Rea
26.5k1586174
answered 1 hour ago
TomTomTomTom
2,60321215
Re: "since when do you pay [tax] on assets?" ... the answer is: during liquidation -- potentially. On company windup, a liquidation distribution would return surplus equity (if any remains after settling liabilities) to shareholders. Such a distribution can constitute a return of invested capital, as well as retained earnings. Distributing retained earnings to a shareholder would trigger a personal tax liability. So, in theory, "assets" held by a liquidating company could become profit/income to shareholders, from their personal tax perspective. Just not if it's all return of capital.
– Chris W. Rea
32 mins ago
Actually no. Potentially and only for retained earnings, awhich I actually explicitly mention (selling assets for a higher than the book price).
– TomTom
28 mins ago
add a comment |
"I'm thinking I will only pay tax on £31,101" - since when do you pay on assets? With some very few exceptions, taxes are paid on profits. Which you say nothing about.
"Also what exactly are 'current liabilities'" - they are liabilities at the moment the snapshot of the balance is taken. Stuff like unpaid invoices (which may not be due to be paid yet, you know), stuff like open credits or mortgages that are to be paid over time.
"What about the tooling and machinery I own ?" - if those are company assets, then their value in the books (which may not be market value) would have already been included as part of total assets.
"Do I get to sell that off and will there be any further tax " - again, you pay tax on profits, regardless where they come from, as a principle. If you sell a machine for more than it is worth (in the books, as asset) then this is profit.
edited 49 mins ago
Chris W. Rea
26.5k1586174
answered 1 hour ago
TomTomTomTom
2,60321215
Re: "since when do you pay [tax] on assets?" ... the answer is: during liquidation -- potentially. On company windup, a liquidation distribution would return surplus equity (if any remains after settling liabilities) to shareholders. Such a distribution can constitute a return of invested capital, as well as retained earnings. Distributing retained earnings to a shareholder would trigger a personal tax liability. So, in theory, "assets" held by a liquidating company could become profit/income to shareholders, from their personal tax perspective. Just not if it's all return of capital.
– Chris W. Rea
32 mins ago
Actually no. Potentially and only for retained earnings, awhich I actually explicitly mention (selling assets for a higher than the book price).
– TomTom
28 mins ago
add a comment |
"I'm thinking I will only pay tax on £31,101" - since when do you pay on assets? With some very few exceptions, taxes are paid on profits. Which you say nothing about.
"Also what exactly are 'current liabilities'" - they are liabilities at the moment the snapshot of the balance is taken. Stuff like unpaid invoices (which may not be due to be paid yet, you know), stuff like open credits or mortgages that are to be paid over time.
"What about the tooling and machinery I own ?" - if those are company assets, then their value in the books (which may not be market value) would have already been included as part of total assets.
"Do I get to sell that off and will there be any further tax " - again, you pay tax on profits, regardless where they come from, as a principle. If you sell a machine for more than it is worth (in the books, as asset) then this is profit.
edited 49 mins ago
Chris W. Rea
26.5k1586174
answered 1 hour ago
TomTomTomTom
2,60321215
"I'm thinking I will only pay tax on £31,101" - since when do you pay on assets? With some very few exceptions, taxes are paid on profits. Which you say nothing about.
"Also what exactly are 'current liabilities'" - they are liabilities at the moment the snapshot of the balance is taken. Stuff like unpaid invoices (which may not be due to be paid yet, you know), stuff like open credits or mortgages that are to be paid over time.
"What about the tooling and machinery I own ?" - if those are company assets, then their value in the books (which may not be market value) would have already been included as part of total assets.
"Do I get to sell that off and will there be any further tax " - again, you pay tax on profits, regardless where they come from, as a principle. If you sell a machine for more than it is worth (in the books, as asset) then this is profit.
edited 49 mins ago
Chris W. Rea
26.5k1586174
answered 1 hour ago
TomTomTomTom
2,60321215
edited 49 mins ago
Chris W. Rea
26.5k1586174
edited 49 mins ago
Chris W. Rea
26.5k1586174
edited 49 mins ago
Chris W. Rea
26.5k1586174
26.5k1586174
answered 1 hour ago
TomTomTomTom
2,60321215
answered 1 hour ago
TomTomTomTom
2,60321215
answered 1 hour ago
TomTomTomTom
2,60321215
2,60321215
Re: "since when do you pay [tax] on assets?" ... the answer is: during liquidation -- potentially. On company windup, a liquidation distribution would return surplus equity (if any remains after settling liabilities) to shareholders. Such a distribution can constitute a return of invested capital, as well as retained earnings. Distributing retained earnings to a shareholder would trigger a personal tax liability. So, in theory, "assets" held by a liquidating company could become profit/income to shareholders, from their personal tax perspective. Just not if it's all return of capital.
– Chris W. Rea
32 mins ago
Actually no. Potentially and only for retained earnings, awhich I actually explicitly mention (selling assets for a higher than the book price).
– TomTom
28 mins ago
add a comment |
Re: "since when do you pay [tax] on assets?" ... the answer is: during liquidation -- potentially. On company windup, a liquidation distribution would return surplus equity (if any remains after settling liabilities) to shareholders. Such a distribution can constitute a return of invested capital, as well as retained earnings. Distributing retained earnings to a shareholder would trigger a personal tax liability. So, in theory, "assets" held by a liquidating company could become profit/income to shareholders, from their personal tax perspective. Just not if it's all return of capital.
– Chris W. Rea
32 mins ago
Actually no. Potentially and only for retained earnings, awhich I actually explicitly mention (selling assets for a higher than the book price).
– TomTom
28 mins ago
Re: "since when do you pay [tax] on assets?" ... the answer is: during liquidation -- potentially. On company windup, a liquidation distribution would return surplus equity (if any remains after settling liabilities) to shareholders. Such a distribution can constitute a return of invested capital, as well as retained earnings. Distributing retained earnings to a shareholder would trigger a personal tax liability. So, in theory, "assets" held by a liquidating company could become profit/income to shareholders, from their personal tax perspective. Just not if it's all return of capital.
– Chris W. Rea
32 mins ago
Re: "since when do you pay [tax] on assets?" ... the answer is: during liquidation -- potentially. On company windup, a liquidation distribution would return surplus equity (if any remains after settling liabilities) to shareholders. Such a distribution can constitute a return of invested capital, as well as retained earnings. Distributing retained earnings to a shareholder would trigger a personal tax liability. So, in theory, "assets" held by a liquidating company could become profit/income to shareholders, from their personal tax perspective. Just not if it's all return of capital.
– Chris W. Rea
32 mins ago
Actually no. Potentially and only for retained earnings, awhich I actually explicitly mention (selling assets for a higher than the book price).
– TomTom
28 mins ago
Actually no. Potentially and only for retained earnings, awhich I actually explicitly mention (selling assets for a higher than the book price).
– TomTom
28 mins ago
add a comment |
Paul Ryan is a new contributor. Be nice, and check out our Code of Conduct.
Paul Ryan is a new contributor. Be nice, and check out our Code of Conduct.
Paul Ryan is a new contributor. Be nice, and check out our Code of Conduct.
Paul Ryan is a new contributor. Be nice, and check out our Code of Conduct.
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3
Who provided this balance sheet? If it's your own accountants can you ask them for a full breakdown of the figures?
– Ganesh Sittampalam♦
2 hours ago
The accountant did also supply a profit / loss statement. I guess that's what I should have been focusing on.
– Paul Ryan
1 hour ago
If you want to close it, then IMO the assets are actually the most important thing. You'll need to get the net money out somehow and you might end up paying personal taxes at that point.
– Ganesh Sittampalam♦
43 mins ago