While the above item 1 is fairly obvious and probably does not cause any problems, with positions 2 and 3, be sure to avoid a significant accounting transaction. This can happen when the amounts requested require payment of an account: if the payment is to cost,. B for example, a fee for processing a cheque, then these fees, however small, are considered a significant accounting transaction and would lead the company to lose the business in a situation of rest. Faced with the ignorance of a significant accounting transaction, we strongly recommend that dormant business owners cover incidental costs without using the company`s bank account. Instead, you can pay them in person or have them paid by another company. In addition, the clerk may also remove the name of the dormant business and make it active if he has reasonable grounds to believe that a dormant business has been doing business. Therefore, it is important for the dormant company to make efforts to carry out its activities over the next 5 years, which, if not, will lead the Registrar to duplicate. One of the advantages of the dormant status of the company is that it reduces the legal burden of a business. A private company described as both “small” and “dormant” must present to The Companies House only an unaudited abbreviated balance sheet and certain required notes.
There is no need to file a profit and loss account or a director`s report – although the company may still have to prepare it for the presentation to shareholders. More information can be found in our “Types of Limited Liability Companies” guide. There are a number of reasons why a company can fall asleep. A business may rest from the time it was created or an existing business venture could be suspended. But “sleeping” can mean different things, depending on the point of view you are looking at. For example, a company may have dormant status for corporate tax purposes, but may not meet the stricter definition used by Companies House. Companies House use a stricter definition of the dormant company. They define a dormant business as one that has not had significant accounting transactions during the accounting period.
“Significant” accounting is defined as an accounting that the company must enter into its accounting records. If these transactions do not take place during the financial period, the entity may have dormant status. If you have taken these steps, you must inform the IRD of your company`s decision. The IRD would then notify you of the sending of a notice to send a “corporate tax return” until your dormant company has a review exemption in Hong Kong to confirm “sleeping” status. A company should only apply for dormant status if it meets the following conditions: your business may be considered dormant if it does not currently enter into any activity and does not have other sources of income, including capital income. If the dormant status of the business is lost due to a major accounting transaction, the entity must submit regular accounts. A dormant business that starts trading again immediately loses its dormant status and is considered active for corporate tax purposes. 1. Make sure the company has the right to apply for dormant status by checking the eligibility criteria under the above conditions.