Dormant company for legal agreements...
MrKris started this topic @ 01:38 on 28/07/2004
Dormant company for legal agreements - sole trader for financial transactions
Does anyone know if there is any reason why I would not be able to incorporate a private limited company, maintain it as a dormant company, and then use that entity to enter into legal agreements/contracts with customers, but conduct financial transactions as a sole trader?
If dormant company just means that the company has no significant accounting transactions during a financial year, then the company is still a legal entity (just like any other company) and therefore it is able to enter into agreements with other people/companies.
Thus, I could take advantage of the name (e.g. My Company Limited) and limited liability if someone sues the company.. without the hassle of the extensive accounting requirements and paperwork (for the time being - until I'm making enough profit).
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- Kris
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RE: Dormant company for legal agreements...
MrKris | 28/07/2004 03:02 PM
Thanks for your response.
Is there anything in particular that would stop me from doing something like that?
Obviously it would have to be clear who provides what services to the customer.
For example: the terms & conditions would clearly state that the customer is entering into 2 separate agreements:
- One with Mr K X Xxxxxx trading as My Company (sole trader) - which would state that upon receipt of £12.00 one would arrange for My Company Limited to provide certain services to the customer.
This agreement would make no representations or warranties with regard to the services. It would just deal with the customer's right to a refund if they are dissatisfied and any other applicable statutory/consumer rights.
Essentially, I would be acting as an agent / middle man. All the customer is paying me for is arranging for a company to provide services.
- The other agreement would be with My Company Limited - and would outline the terms and conditions of the services provided. This would have no mention of any financial obligations.
Therefore, if the customer has a problem with the service it receives from My Company Limited, it is the limited company that is liable not me.
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- Kris
RE: Dormant company for legal agreements...
emplaw | 28/07/2004 05:57 PM
Still no as in the scanario based above the second ie Ltd contract has no consideration therefore will not be deeemed a legal contract. The customer would be contracting with both businesses in this arrangement so the risk is still there for the self employed venture.
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RE: Dormant company for legal agreements...
MrKris | 28/07/2004 06:50 PM
Ok then, agreement.. customer pays me money.. I pay company credit note / voucher.. company provides customer with the service.
Everyone derives consideration.
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- Kris
RE: Dormant company for legal agreements...
MrKris | 28/07/2004 06:57 PM
NULL
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- Kris