Why Incorporate A Dormant Company? – Complete Formation Process

A dormant company is that has no significant accounting transactions during a financial year. In case of a dormant company there are no entries in the companies accounting records. Te most common reason of forming a dormant company is to secure the name and prevent it from others to use it. The trading companies may choose to be dormant if they stop trading and may wish to start their business again in future.

Why you should go for a dormant company?

Various causes are there to use a dormant company such as: it protects the brand name or trade mark you wish to have. Securing a dormant company is very help full in preventing the competitors from using the same brand name that you may wish to use for future business purpose. A company can remain dormant for a very long time or for an indefinite period. There is no time frame to keep a company in dormant status.

Few companies are there which are running, but want to make their company dormant due to various reasons such as: they may not be in a condition to run their company in current situation or they want to give a break to their business to start it again in future. You can start your business at a later stage whenever you want according to your suitability

Even if you are having a dormant company and you are not trading through it, but the directors of the dormant companies must have to perform some administrative duties every year

1)      You are liable to complete an annual return to companies house, even if your company has the dormant status.

2)      All dormant companies are compelled to file annual accounts at companies’ house. Those dormant companies which are not doing any trade are also liable to file annual accounts at companies’ house.

3)      Form DCA can be used by the dormant companies never traded to file their account information.

4)      Any change of registered address must be sent to the companies house.

5)      During the time of annual account submission the dormant company shouldn’t generate any transaction. Making any transaction during this time will force you to submit your full accounts information to the companies house

The Dormant companies are allowed to have few transactions in a restrict zone such as: civil penalty payment for late filling accounts, paid to the registrar of company for company name change, company registration and filing of annual returns, payment for shares taken by subscribers to the memorandum of associations

You don’t have to report the companies’ house if a dormant company starts trading, as the companies house will be aware once you filled your next annual accounts. Usually you have to submit the annual dormant company account at the end of the each financial year.

The directors will be answerable if they won’t be able to submit the documents to the companies house on time. By not submitting the document in companies house on time is regarded as criminal offence. For late submission of annual accounts there is a provision of automated civil penalty