Closing a limited company is one of the most crucial decisions that need careful consideration. No matter whatever the reason for your company closure is, you should consider all other factors and options before taking this decision. If you’re doubtful whether closing your company is the right step to take or not, then you must think about its dormancy.
Perhaps there might be many reasons for the company’s closure or dormancy. You might have stopped trading, or you are on a break, or you are retired, got a permanent job, etc. So instead of closing it, making it dormant is the better option. Let’s see how!
Need help on the company’s dormancy or closure, contact us!
What is a Dormant Company?
If your company has no significant transaction in an accounting year, it’d be called a dormant company. A significant transaction is a transaction that should be placed in accounting records. A dormant company is not a dead company, it just goes inactive and can restore its activities after a certain time. Companies house maintain records of a dormant company.
Advantages and Disadvantages of Company Closure:
- If you don’t require any business, closing your company removes your record from companies house
- If you are voluntarily dissolving your company, you can do it quickly and it’s inexpensive
- You get free from administrative requirements
- Tax implications because of taking money out from the company
- Creditors can restore it if they prove the company owes them money
- If you decide to restore, you have to start it from scratch and follow the company formation process again
Ask our experts how you can be saved from the company’s closure.
Advantages and Disadvantages of Making a Company Dormant:
- You can avail break by temporary ceasing your company if you need it due to illness or any other reason
- Cost-efficient to make your company dormant
- It provides you the time to restructure your company from a new angle
- Cheaper than closing a limited company
- Few administrative and legal obligations
- Need to file dormant account and need submission of confirmation statement to companies house every year
If you have facing issues related to a dormant company, get in touch now!
Closing a Limited Company Or Leaving it Dormant? Best Option?
If you’re certain that, the company is of no use then the closing down option can be favorable. While closing, you can take professional help to deal with your tax liability and if you are willing to go for another business venture. On the other hand, leaving your company dormant is the best option when you think it will restart sometime in the future. For reactivation, you just have to inform the authorities.
If you’re looking for expert advice on closing a limited company or making it dormant, Cheap Accountants in London would love to help. We’ll provide you with the expert insight needed. We will make sure to inform you about the consequences of each option.
Get in touch with our professionals for further help!
Disclaimer: This blog post provides general information on the given topic.