Understanding when, why and how to make a company dormant

In certain situations, a company may need to make itself dormant, meaning it temporarily ceases trading and becomes inactive. This article aims to provide an overview of when a company might choose to make this decision and explains the available options for making a company dormant. While companies can choose to directly file with Companies House, this article will also highlight the option of using Standard Accounting's online service for a more streamlined process.

When does a company need to make itself dormant?

There are various circumstances under which a company might opt to make itself dormant. Here are a few common scenarios:

1. Temporarily Pausing Operations: If a company needs to pause its trading activities, such as during a restructuring phase, change in business strategy, or a temporary market downturn, it may choose to become dormant. This allows the company to preserve its legal status without incurring ongoing operational costs.
2. Holding Assets or Intellectual Property: Companies that solely hold assets, intellectual property rights, or investment properties may decide to become dormant until such time as these assets are actively utilised or sold.
3. Ownership Changes or Mergers: In cases where a company undergoes changes in ownership, such as a transfer of shares or a merger with another entity, making the company dormant can provide a legal and administrative transition period.

How to make a company dormant

Companies have the option to directly file for dormancy with Companies House or utilise the services of third-party providers like Standard Accounting for a more convenient process.

1. Standard Accounting's Online Service: Companies can opt for the online service provided by Standard Accounting. As a reputable third-party provider, Standard Accounting specialises in assisting companies with their financial and administrative obligations. Utilising their online service streamlines the process and ensures compliance.
2. Filing Directly with Companies House: Companies House, the official registrar of companies in the UK, offers an online platform for companies to file the necessary documents to make a company dormant. It is essential to have a clear understanding of the filing requirements and ensure accurate completion of the required fields when choosing this option.

To file for dormancy through Standard Accounting, companies can follow these steps:

1. Go to the Standard Accounting search page.
2. Search for your company name or number to locate the correct company details.
3. Add the "make company dormant" service to your order, indicating your intention to make the company dormant.
4. Proceed to the checkout page to finalise the request.

By utilising Standard Accounting's online service, companies can simplify the process of making a company dormant, saving time and ensuring compliance with the necessary legal requirements.

Conclusion

When a company finds itself in a situation where temporarily ceasing trading and becoming dormant is necessary, it is crucial to understand the options available for achieving this status. Making a company dormant allows businesses to protect their legal status, preserve assets, and manage transitional periods effectively. While filing directly with Companies House is an option, using a trusted service provider like Standard Accounting can streamline the process and offer professional assistance. Regardless of the chosen method, complying with the appropriate legal procedures is vital to ensure a smooth transition into the dormant state.