If you have a UK-based company then you must be familiar with the term “Dormant Accounts”. In this blog post, we are going to answer the question ‘What are dormant accounts?’ along with exploring the process of filing dormant company accounts. Before we rain on your parade, let's get the ball rolling!
Dormant accounts are bank accounts, business accounts, or company accounts that have had no significant financial transactions/financial activity over a specific time period. According to the UK government, a company is considered dormant if it has ceased trading, because companies are required to file dormant accounts with Companies House, if:
An account becomes dormant for several reasons, the common of which is: The company or business temporarily ceases/halts its operations. This could be perhaps because of restructuring, seasonal fluctuations, or changes in market conditions; in which case the account remains open, but there are less or insignificant financial activities.
If you feel like your company meets the criteria for filing dormant accounts, you will have to prepare and file them with Companies House either online or by post. In the latter case, it can take a lot of your time. You can do it online through a reliable and affordable accountancy firm that provides Dormant Accounts services. Here is what you will include while filing your dormant company account:
Keep in mind, your dormant accounts still need to comply with accounting standards, like the Companies Act 2006.
Below is an example of a dormant account’s balance sheet structure:
Balance Sheet | 30 April 2022
Data | £ |
Share capital called up but not paid | 1 |
Net Assets | 1 |
Issued share capital | 1 |
Ordinary share of £ | 1 Each |
Total Shareholder Funds | 1 |
According to Companies House, your company is required to file a dormant account within 9 months of the end of the fiscal year. It is important to file on time because if you fail to do so, it can result in fines and penalties to be paid to Companies House.
Here is what to keep in mind if your company is dormant:
A dormant account can have various impacts on your company, which can be both positive and negative:
Positive: It can help you in keeping your business's legal standing and avoiding fines or penalties for non-compliance.
Negative: Closing dormant accounts can harm your company's credit standing and increase the difficulty of getting credit or funding later on. Additionally, it could be more challenging to draw in partners or investors who would interpret dormant accounts as an indication of unstable finances.
For businesses or companies in the UK, understanding and filing a dormant account is very important, because it helps in maintaining transparency, compliance with legal obligations, etc. Having up-to-date accounts can help you transform your company’s financial standing when it resumes its trading or overall operations.
Visit our dormant accounts services page and let us help you file dormant company accounts successfully. Get your business rolling – the proof is in the pudding!
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