Balance sheet for a dormant company

Yes, that would be a way round his problem but it's all a sledgehammer to crack a nut.

He has a company that's not trading. He doesn't need a bank account. He chooses a bank that wants a ridiculously high balance and then he doesn't even understand what dormant company accounts are or how to prepare them.

He's getting into a hopeless tangle for no reason at all.

Why does he even need a company?

What do you mean by DCA balance? There is no such concept.

You are thinking of a Dormant Company Account balance sheet.

I know all about Dormant Company Accounts.

You said Dormant Company Accounts balance was £10. There is no such concept. Individual items in the balance sheet have amounts but what you are saying is just nonsense.

Balance sheets always balance if done correctly.

There's no such thing as a "balancing figure". All amounts can be justified independently.

You are still not understanding the concept of dormant company accounts.

The company could have traded for years, have share premium accounts, revenue reserves, etc. Then in one particular period the company is dormant and dormant company accounts can be prepared. Companies House don't recommend using the DCA template though.

Can you answer the following questions?

Why have you formed a company?

Why have you opened a bank account?

Why don't you have an accountant?

You are thinking of a Dormant Company Account balance sheet.

I know all about Dormant Company Accounts.

You said Dormant Company Accounts balance was 10. There is no such concept. Individual items in the balance sheet have amounts but what you are saying is just nonsense.

Balance sheets always balance if done correctly.

There's no such thing as a "balancing figure". All amounts can be justified independently.

You are still not understanding the concept of dormant company accounts.

The company could have traded for years, have share premium accounts, revenue reserves, etc. Then in one particular period the company is dormant and dormant company accounts can be prepared. Companies House don't recommend using the DCA template though.

Precisely. But we are actually specifically talking of a hypothetical situation, where a company has never traded. In this defined situation, where the only transaction may have been selling of shares (so no premium on shares), using the DCA format, the balance sheet cannot be made to balance at 0, it has to be at the Issued Share Capital figure. That's all I'm saying and that this is true no matter whether shares were called up or not or whether there is money in the bank or not.

Look at the DCA format above and you will see that. Item c) is not possible! Because: "Shares are "issued" when a person is registered as a member in the company's register of members." (GBA6). And I believe members who are subscribers to the Memorandum are on that register, even if other possible members are not.

Cannot do that now as there was 50 in bank at the date accounts must be made up.

DCA Form of Accounts

Authorised Share Capital: Number: 10 ShareType:Ord Value: 10

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

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

Net Assets: ......................................................____

Issued Share Capital (Total Shareholders Funds): Number: ____ Share Type: Ord Value:____

Issued Share Capital ....................____

During the year, the company allotted ____ ordinary shares

with an aggregate nominal value of ____

the consideration received by the company was ____

---------

That would make two transactions that would make it non-dormant instead of one.

What is item c)?

An accountant would have told you not to open a bank account and how to complete the accounts.

No

When you say "balance" do you mean Net Assets and Issued Share Capital?

If Share Capital is the only shareholders funds then obviously the Issued Share Capital cannot be £0.

If you look at the latest form for dormant companies it only allows subscriber shares. So there's no share premium or directors loan.

When you say "balance" do you mean Net Assets and Issued Share Capital?

If Share Capital is the only shareholders funds then obviously the Issued Share Capital cannot be 0.

If you look at the latest form for dormant companies it only allows subscriber shares. So there's no share premium or directors loan.

I agree that it shouldn't allow £0 but the error check simply checks the additions I think.

The authorised share capital doesn't affect the share premium at all.

If, with the DCA format, I could have said I sold each share for 5, then I could have achieved a balance equal to my bank account (50) and been a dormant company, because all the monies would have related to shares. But, I don't think I could have done that.

Think? It's obvious you can't do that.

The company doesn't sell shares - they issue them.

Think? It's obvious you can't do that.

The company doesn't sell shares - they issue them.

...

Subscriber shares have to be at par - I think.

There is nothing wrong with a company raising more funds than the authorised capital. They cannot issue more shares than the authorised number.

No. They are subscribing to an issue of shares.

If you have shares in a company you can sell them to somebody but a company issues their own shares.