When your business faces financial hurdles, or you’re thinking about changing direction, you might consider closing your company or making it dormant. I’ll help you understand your options.


What’s the Difference Between Dissolved and Dormant?

Dissolved means you’re closing your company permanently. Once dissolved:

  • Your company no longer exists legally
  • You can’t trade or take on new debts
  • All obligations must be settled beforehand

Dormant, however, means your company isn’t trading (or receiving money from investments) but still exists. In this state:

  • Your company remains registered
  • You don’t trade or generate revenue
  • You still file your confirmation statement (previously annual return) and annual accounts with Companies House

If your company is small enough to be considered a micro-entity, you can submit dormant (simplified) accounts.

Dissolved or Dormant: What’s the Best Option?

Keeping your company dormant might be the right choice if:

  • You think you might restart the business later and simply need time away
  • You want to retain your company name and structure
  • You’re willing to handle minimal annual filings and costs

Dissolution could be better if:

  • You’re certain about not returning to this business
  • You want a clean break from all obligations
  • You prefer to avoid any future filings or compliance activities

As you weigh these options, think about your long-term business goals and financial situation. How much effort are you willing to put into maintaining a dormant company? Or would you rather have the finality of dissolution?

Remember, there’s no one-size-fits-all answer. Your decision should align with your specific circumstances and future plans.

FAQs: Should I Close My Company or Make It Dormant?

To prepare your company for dormancy, ensure all debts are paid, and current contracts are fulfilled or formally concluded. Notify HMRC and Companies House of your intent to make the company dormant, and adjust your financial accounts to reflect no pending transactions.

After deciding to close your company, you should settle all financial obligations, inform all stakeholders, deregister your company from HMRC and other regulatory bodies, and file for dissolution at Companies House.