Balance sheet for a dormant company

It's not a balance sheet that makes a company dormant. It's the transactions that determine whether it is dormant or not.

Why do you say issued share capital? There could be a share premium.

A dormant company doesn't have to have no transactions. I posted the Companies House link that explains what is required for a company to be dormant.

Yes

Yes, if I know what the transactions are.

It's not a balance sheet that makes a company dormant. It's the transactions that determine whether it is dormant or not.

Why do you say issued share capital? There could be a share premium.

A dormant company doesn't have to have no transactions. I posted the Companies House link that explains what is required for a company to be dormant.

Yes

Yes, if I know what the transactions are.

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It's a private limited company.

What transactions then make a company dormant or not? Explain in more detail by examples or whatever.

In "my mind eye" I went to the bank ostensibly to put 10 in representing payment for the issued shares. That's just in "my minds eye"! In fact, it was required by the bank that I put in 50 to start the account. That 50 does *not need* to represent shares payment at all. I (or the Company) have not issued any share certificates. But there is 50 in the bank.

I'd really like to know how you can have other than zero on the assets side in a dormant company. Teaching moment here.

In message , Richard writes

There is information available from Companies House.

A company is dormant if it has had no 'significant accounting transactions' during the accounting period. A ?significant accounting transaction? is one which the company should enter in its accounting records.

The amount paid for shares on the formation of a company and a few costs that the company may incur in order to keep the company registered at Companies House do not count as significant accounting transactions

A company can be non-trading in the sense that it isn't doing business. But it may still have other accounting transactions going through its books, which means that it is not dormant in a legal sense. A dormant company must not have any accounting transactions except specific allowable transactions that can be disregarded,

Disregard: payment for shares taken by subscribers to the memorandum of association; fees paid to the Registrar of Companies for a change of company name, the re-registration of a company and filing annual returns; and payment of a civil penalty for late filing of accounts.

Companies may be dormant for various reasons, for example, to protect a company name, in readiness for a future project, or to hold an asset or intellectual property. Some flat management companies whose main purpose is to own the head lease or the freehold of a property choose to become dormant by setting up a residents' association to deal with any expenses.

A company can remain dormant for as long as necessary - indefinitely if, for example, its purpose is just to prevent the name being used by another company. However, there are expenses associated with keeping a company on the register. In particular, there is an annual document-processing fee payable on delivery of an annual return. The fee is £15 when you submit it electronically, or £30 when you submit it on paper). While the company is dormant, it must still prepare and submit various other documents including annual company balance sheets to Companies House. The company will have to decide how to meet these expenses and who will run the company and be responsible for ensuring that it meets all the legal requirements.

Hi. Thanks, I now begin to understand this stuff.

I have in fact just been protecting a company name and am still planning much of the business.

I thought I had three options but now I think I have two.

a) Say that the 50 I put in bank was share monies. I *cannot do this* because authorised capital is only 10. I cannot say shares were sold at a premium, because selling shares at a premium is not allowed (I feel sure).

b) Say that I paid in 10 for the share issue which was 10 shares at 1 each. That would mean the other 40 would in the bank would simply be be disregarded. If it was not disregarded there would be an unbalance beteen Net Assets and Shareholders Funds:

Authorised Share Capital: (Number:10 - ShareType:Ord - Value: 1

Called Up Share Capital Not Paid: ........0

Current Assets: (In bank & in hand): .....10

Net Assets: .......................................................10

Issued Share Capital (Total Shareholders Funds): (Number:10 - Share Type: Ord - Value: 1..... .10

During the year, the company allotted 10 ordinary shares

with an aggregate nominal value of 10

the consideration received by the company was 10

c) Say no monies were paid for shares, disregarding the 50 as a necessary technical transaction to open up the account:

Authorised Share Capital: (Number:10 - ShareType:Ord - Value: 1

Called Up Share Capital Not Paid: ........0

Current Assets: (In bank & in hand): .....0

Net Assets: .......................................................0

Issued Share Capital (Total Shareholders Funds): (Number:0 - Share Type: Ord - Value: 1..........0

There is a fourth option: I terminate my business account.

Anyone have any opinions on what to do here, which fiigure to use, the 0 or the 10 figures?

Actually I do only have two options regarding the balance sheet.

In addition, I may have the option of terminating my bank account, so there is no bank balance and starting one up again at a later date. Unless Companies House objects.

One question: Is this exception only allowable IF monies are not deposited in a bank?

e please tell me under what circumstances the following balance

Assets - fixed assets, bank balances, petty cash, debtors. A dormant company is not decided on a balance sheet date it is a period of time.

The only allowed transactions of a dormant company are:

(a) payment for shares taken by subscribers to the memorandum of association;

(b) fees paid to the Registrar of Companies for a change of company name, the re-registration of a company and filing annual returns; and

(c) payment of a civil penalty for late filing of accounts.

Disregard this.:c)

I know what the problem is with DCA. DCA balance sheet can cope with a shares transaction which is an allowable transaction. But what it cannot cope with, unless modified, or funds in bank ignored, is a tranaction that bought to be allowable. And probably is allowable? That is a technical depositing of a minimum amount of money in order to open up an account. This is what cannot be dealt with by the current DCA template. Perhaps it ought to be modified?

Some has mentioned filing under the Abbreviated Accounts template. I worry that that makes it look like my company is not dormant and I might suffer financially because of that. Any opinions on this? Anyone!

"Richard" wrote

But your company is not dormant - several people have already told you that!!

"Richard" wrote

How many people do you need to tell you that your company was *not* dormant?

It's only not dormant by arging that a deposite of 50 imposed on me by the bank to open a bank account is not an allowable transaction.

That's the only thing I'm currently seeing what might make my company not dormant and no-one has sated that this is not an acceptable transaction.

Few actually are good communicators here.

"Richard" wrote

The list of allowed transactions has been given to you already (more than once). Creating a 40 Director's Loan is not one of them, is it?

I've not been following this closely but I think I understand what the OP is asking.

Maybe this is so obvious to everybody else because they have knowledge that they're not sharing.

Can the OP open this account with 50GBP of his own money that he gives to the company for safekeeping (note he doesn't lend it to the company). Is there any difference between that and a dormant company keeping something unrelated to the company in the company safe for someone.

It does seem a bit weird to me that he wants to end up with a bank account with 10GBP in it, but the bank wants a first transaction of

50GBP and there's no way to achieve that without 50GBP going through the company accounts.

I suppose the two solutions are 1) Put the 10GBP in a safe and don't open an account at all. 2) find a different bank that lets you open an account with 10GBP.

Or does the account even need to start as a company account? Can he open it with the 50GBP, withdraw the 50GBP and then draw a line and say "company accounts start here" and pay in the 10GBP?

I've had no experience of company accounts. I've only ever worked as a sole trader. And there I only had one bank account. I did have two credit cards, one I used for business and one for private use but that was purely as a convenience for myself and made it easier to do my accounts and tax return.

Tim.

In message , Richard writes

You seem to be still confused about what makes a company dormant as opposed to one that is trading. If you trade at all during the period from one set of accounts to the next it is not dormant, if you do anything outside of the allowable transactions it is not dormant. If it is dormant now and all you do is within the allowable transactions it can remain dormant.

For example an allowable transaction would be payment for shares taken by subscribers to the memorandum of association

So in this case dormant is not a situation in which absolutely nothing can happen, just that there is a short list of what is allowable and one of those items is accepting a payment for shares.

So were you to allocate shares and these were subscribed the money paid is an allowable transaction and is disregarded. You simply allocate the shares and take the £50 in payment for the shares and deposit it in the Bank - job done.

Correct. I am technically a dormant company because 40 of the monies I put in is not on the list of exemption.

Well, I've done what Companies House said. Because there is 50 in the bank and only 10 of that can be share capital, I've had a transaction not listed as an exemption. So, I cannot be a dormant company in a legal sense. Besides, and perhaps this is as much an issue as anything, the Dormant Company Accounts template cannot handle that extra 40. So, another form of account must be used.

Ive filed under Abbreviated Accounts and treated the 40 as part of "Provision for liabilities and charges". For the year ending 30 June 2009 the Company was entiteled from exemption from audit. The members of the Company have not required an audit.

So, I think I'm pretty much, for all practical purposes, as a dormant company.

The problem I created for myself, is that I went and stated authorised share capital was 10. Then I found out the bank would only open an a/c with 50. Also, I don't think I needed to open a bank account!

In message , Richard writes

In exchange for fifty pounds you can issue shares with a nominal value of ten pounds and the remaining forty pounds could be recorded in the share premium account if the shares are considered to have been issued at a premium.

For the sake of correctness: Dormant Company Accounts *cannot* have a balance of 0.

Issued Share Capital is taken as what has been agreed to be taken, recorded in Memorandum of Association.

Therefore, where no monies has been paid for shares, thus no monies in bank, Called Up Shares Not Paid has to be recorded with a figure that matches Issued Share Capital, even if Shares were not called for. Unless this is so, there cannot be a balance where shares have not been paid for.

You are not a good reader. We have explained several times that your company is not dormant but you seem unable to take it on board.