Registering a Dormant Company
October 24th, 2008 . by MichaelI have been advised that I should register a dormant company as a means of protecting the trading name I currently use for my sole trader business. I have a couple of question however and would appreciation some further information about the subject.
These are as follows:
- How does the dormant company option work?
- Would I still be able to continue working as a sole trader under the same name?
- Would I need to start paying company taxes?
- How easy would it be to make it active and would there be a cost involved?
It sounds like a viable option but I would like to know a few more details.
Registering a dormant company and leaving it as a non trading entity is a common means of securing a name and preventing others from using it for their company.
If someone were to use that name when forming a company, then potentially customers might be confused and mistake the company for your business and some of your hard work in building a brand name could be lost.
Having a dormant company in no way affects you as a sole trader. The sole trader business would continue as before, using the existing name. All this would mean is that you also had a dormant company which protected the name.
There would no company or business taxes of any kind to pay as the company would be dormant. It would not trade and therefore have no turnover or profit. Corporation tax, PAYE, VAT, NIC would not be applicable to it.
Making a dormant company active is simply a case of trading to trade with it, issuing invoices in the company’s name for example. There are no costs involved in making a dormant company active.
The expenditure required to keep a company dormant are the £15 per year Companies House Annual Return fee and the submission of dormant company accounts which can be done via the Companies House website and costs nothing.
That sounds good so far, I think I might choose that option, one last question. I’m registering for VAT as most of my business is/will be with other businesses, will this affect the “company” as in getting a VAT number as a sole-trader then having to switch it to the company number?
If I understand your query correctly, that is once you register for Vat as a sole trader and then at some stage might want to switch it to the company, then the transfer process is very straight forward.
The sole trader to limited company route is commonplace and HMRC have adequate systems in place to deal with this without causing much inconvenience.