UK Dormant Company Formation Advantages & Benefits

Dormant company advantages & benefits of non-trading companies: the benefits of a dormant company registration are many and varied. An individual may wish form a non-trading company for the following reasons: -

To protect the reputation of a sole trader business: the most popular reason for the registration of a dormant company is to protect a sole trader business. In comparison to setting-up a limited company, operating as a sole trader offers an individual a range of advantages. While it is simpler and cheaper for an individual to set up a business as a sole trader, it is possible for a rival to register a private company using the same name, unless the name has been trademarked.

For example, if a sole trader has spent countless years building up a reputation and then finds that someone else has set up a new limited company using the same name, the sole trader will have to work hard to ensure that new and existing customers are able to distinguish one business from the other. If the sole trader purchased a dormant company with the same name as his sole trader business, he could prevent others from taking advantage of, or potentially damaging, his reputation. He can keep his company dormant for as long as he requires - indefinitely if, for example, its main purpose is to protect his business' name.

To preserve a company in a non-trading period: a dormant company registration can prove useful when an individual wishes to stop trading for a specific period of time. For example, if an individual has been running a successful private company but wishes to move abroad, he can choose to preserve his limited company so that he can restart it at a later date. By restarting a dormant business, he will not run the risk of receiving a rejection from Companies House.

Furthermore, if his non-trading company has been on the Register of Companies for a lengthy period of time, this will provide his company with a sense of maturity and can help to boost its credit worthiness. By making a company limited by shares dormant, an individual can also avoid much of the cost of maintaining a limited company, and will not need to go through the administrative processes associated with closing down a company and establishing a brand new one.

Register a dormant company with Coddan: if you have a business idea but don't want to start trading yet, one strategy you can use to protect it is by registering a dormant company but not formally trading with it. The non-trading company incorporation could be used to hold intellectual property such as trademarks and patents. Establishment of dormant private companies can also be used to hold leases for flats and other types of property. If you are thinking of registering a limited company and leaving it dormant, we can help.