Other than accumulating interest, any account that has not
been used for a long time is considered dormant. Following a specified period
of inactivity, financial institutions are obligated by law to transfer funds
from inactive accounts to the state treasury. Time requirements are different
in each state.
Many financial accounts, such as checking and savings
accounts, brokerage accounts, 401(k) s, and pension fund accounts, can go
dormant. All limited companies registered need to file their accounts whether
or not they are trading. All limited companies dormant since incorporation
should find the simplest ways of filing dormant accounts using a web filing service.
Circumstances Where Accounts Become Dormant
1. Making use of a dormant limited company to shield a sole proprietorship
For sole proprietors, the most prevalent benefit of having a
dormant company is the added liability protection it provides (also commonly
referred to as being self-employed). There are several benefits that sole
proprietorships can give small businesses that a limited liability company
cannot.
For obvious reasons, most new businesses start as single
proprietorships since doing so is less complicated and more affordable. If
you're a sole proprietor, no one can form a limited liability corporation with
the same name as your business unless you've trademarked it.
2. Safeguarding Your Limited Liability Company If You Plan To Cease Trading For an Extended Period
If you already have a limited company in place, but you're
going to be inactive for a while, a dormant company could be a good option. You
may be a successful business owner who must temporarily relocate abroad. Keep
your business operations picking up where you left off?
The biggest problem of maintaining a limited business is the
high cost of hiring an accountant to prepare and file company accounts with
Companies House each year. Dormant status for a limited liability corporation
allows its owners to put off paying annual fees and avoid the hassle of winding
down business operations. An accountant can help you determine the best course
for placing your business into hibernation.
Step-By-Step Ways of Filing Dormant Accounts
An annual asset of accounts filing is required of all firms,
even those that have never conducted business. Directors of corporations would
do well to keep tabs on filing deadlines to avoid the fines that may result
from failing to submit annual reports and other financial documents on time.
1. The first step is to Sign in
Once you have signed in, you will see the overview of your
company. Check the next accounts made up to date match the made date of the
accounts you are filing. If you need to change the date by more than seven
days, click the changing accounting reference date link. You will need to wait
for confirmation of your reference date link. Before submitting your accounts,
you will need to wait for confirmation that your reference date has been
changed.
2. If the date is correct, select the file company accounts button
On your account screen, select the dormant company accounts
option. Ensure that your company can file the accounts type by reading the
conditions. Click the file dormant company accounts button. The balance sheet
is automatically pre-populated with the expected made-up date for the accounts.
You can change this date up to seven days on either side. You can now select
the required currency and complete the relevant fields.
3. Enter the current and previous year's figures
Only the current period will be displayed if your company
submits its first-year accounts. Leave the fields blank or enter zero if there
are no figures available. Do not enter any other digital punctuation, such as
the dash. Net assets will total automatically. Additional help can be found by
clicking any of the green information icons.
4. Enter details of the number and types of shares
By either typing in your share class or clicking select and
choose one from the list, then enter the value. Check the statements to confirm
that the company is eligible to submit dormant accounts. Read the balance sheet
note and only tick if the company has acted on behalf of someone.
5. Enter the date the accounts were approved
You will have to provide the name of at least one director.
If you are happy that all the information you have provided is correct, click
validate and continue. Review the accounts you have prepared. If you need to
make corrections, go back, or if everything is okay select print. Copy data for
your records. Then click confirm and submit.
Please note the
submission number in case you have a query; you will receive two emails; one to
inform you that the accounts have been received and the second to say that they
have been accepted or rejected. Then log out.
Bottom Line
After your company has been designated dormant, you will
only be responsible for paying corporation tax or filing Company Tax Returns
once you obtain specific instructions. You must file yearly reports and
confirmation statements even if your business is dormant. Dormant small
businesses may file "dormant accounts" instead of regular financial
statements. They need not submit an audited financial statement.
