The Guide to Dormant Company Bank Accounts

If you’ve got a dormant company sitting on the shelf, you might be wondering: Should I keep my business bank account open? And what happens if I decide to start trading again?

Let’s clear up the confusion with this practical, no-nonsense guide to dormant company bank accounts.

What is a Dormant Company?

In simple terms, a dormant company isn’t currently doing business or earning any income. HMRC views it as ‘inactive’, meaning you haven’t had any significant financial activity during the last financial year.

That means things like:

• Paying suppliers

• Paying employees

• Receiving payments

• Paying bank fees

However, you can still pay Companies House fees or issue initial shares to get the company up and running. For example, if you're setting up a startup that isn’t ready to trade yet, or if your business is on a temporary break but you plan to resume trading in the future. These transactions won’t contradict your dormant status.

Does a Dormant Company Need a Business Bank Account?

No, not while it’s dormant. Having a business bank account and using it, even just to pay a small bank fee, can inadvertently revive your company's activity. This could trigger tax and reporting responsibilities you didn’t plan for.

So, if you're planning to keep your company on hold for now, the easiest way to stay compliant is simply not to have a business bank account at all.

Got the odd small expense? It makes more sense to pay it out of your personal bank account until you’re back up and running. Just be sure to keep records and receipts so it’s easier to stay tax compliant if the business becomes active again.

When Will I Need a Business Bank Account?

As soon as your dormant company becomes active, meaning you start trading, getting paid or spending money for the business, you’ll legally need a business bank account if you are a limited company.

That’s because, in the UK, a limited company is a separate legal entity. You can’t mix its finances with your own. So as soon as you’re back in action, it’s time to open a proper account.

The Best Business Bank Account for Dormant Companies

If your company is about to start trading, you’ll need to open a new account. The good news? There are numerous options available, and it's easier than ever to find one that suits your business.

Here’s what to look for:

1. Low (Or No) Monthly Fees

Some banks offer free business accounts during an introductory period. Others have no monthly charges at all, which is handy if you expect a low number of transactions initially.

2. Simple Online Banking

Digital banks, also known as challenger banks, are experiencing rapid growth in the UK. They sometimes offer a quicker setup, better apps and lower fees than traditional high-street banks.

Additionally, many will allow you to deposit cash at a local Post Office branch if you prefer to have the option of in-person banking.

3. Helpful Features for Small Businesses

Some small business bank accounts offer tools such as invoicing, expense tracking, or even integration with accounting software. If you’re just getting back to trading, these extras can save you time.

Need Help Comparing Dormant Company Bank Accounts?

We know comparing business bank accounts can be overwhelming. That’s why we help UK businesses like yours save time and money by filtering by fees and features, and comparing deals side by side.

It’s a quick and easy way to find the best dormant company bank account when you’re ready to go live again.

In Summary

If your company is fully dormant, it doesn’t need a business bank account, and having one can actually create headaches if it ends up reactivating your business by mistake.

But once you’re ready to get going again, opening a business bank account is a straightforward process. Take a little time to shop around, compare costs, and choose the account that best fits your business needs.