What does Dormant mean?
A dormant company is one that 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.
Costs such as the amount paid for shares on incorporation and a few costs that the company may incur in order to keep the company registered at Companies House, do not count as significant.
What does Non-Trading mean?
The term ´non-trading company´ has no legal meaning. A non-trading company has no significant accounting transactions, which simply means no entries in the company´s accounting records.
What is the difference between a Non-Trading and Dormant company?
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.
It can therefore be said that ALL dormant companies are non traders but NOT all non traders are dormant.
Why have a Non-Trading or Dormant company?
The most common reason for coming across non-trading or dormant companies, is that they are simply incorporated to protect a trading style or product name. The shares of these companies are invariably held by a holding company, this is normally the company you should be interested in. Always look at the shareholders of such companies.
While the company is dormant, it must still prepare and submit various other documents including annual company balance sheets to Companies House.
Dormant or Non Trading Company Filing Requirements
A non-trading company must deliver Dormant Accounts and an Annual Return annually.
Dormant accounts include very little information except for assets and shares held. A dormant company will not be assigned a credit score or limit due to the lack of financial data. See Dormant Companies for more information.