Closing a business is a drastic decision that must be carefully considered, regardless of the reasons why it is closed. If you have questions about the correct way to close up your company, cheap limited company accountants suggest that it is a safer choice to let your company go dormant.
If it is dissolved or whether you let it lay down, the business requires solvent. The first step in determining whether you should take this choice is to understand exactly what it means to your company dormant. Or whether you should really shut it down completely.
What is a Dormant Company?
House Companies describe a sleeping business as follows:
A business is dormant if during the accounting period there were no ‘significant affordable accounting transactions.' The corporation should enter a major accounting transaction in its accounts.
A dormant company is essentially inactive, but it remains on the Companies House register.
But what are each option's advantages and disadvantages?
How do you benefit from keeping your business asleep?
Benefits
- You may spend time running the business, for example, if you get ill or have to travel temporarily outside the country
- The cost of managing dormant company accounts is lower
- If required, you should draw up a restructuring plan.
- How long a business can stay sleeping is unlimited.
- Cost is also lower compared to a business closure
Disadvantages
- And when the company goes dormant, certain administrative tasks and responsibilities remain.
- You need to register inactive accounts and provide Companies House with an annual Confirmation Statement.
Likewise, what are the companies' advantages and disadvantages?
Benefits
- If you don't need your business, it will be removed entirely from the Company House register and allowed you to proceed
- Voluntary dissolution is a fast and affordable closure process.
- After the business is closed there is no further administrative necessity
Disadvantages
- Depending on how you extract funds from your business, there may be serious financial consequences
- If creditors may confirm their business owes them money, they will be able to reinstate the ledger.
- If you change your mind, the whole formation process will have to be repeated
Dormant or Limited Company: What's the right way?
If you are certain that the business will never be used again in the future by voluntarily removing it from the Companies House register, it may be the best choice.
In order to administer your tax liability after closing, it will prove helpful if you receive professional advice and tax assistance particularly if you are thinking of another venture or if you want to return to work.
Making your business dormant, on the other hand, is a reasonable idea if you think the company might be used again. You will simply notify the authorities concerned and, if possible, start trading again.
