Not taking professional advice first
There are lots of very good reasons to form a limited company but it’s important to take advice first on the right company structure for you. Financially, you may better off with a partnership or to trade as a sole trader for example. If you are unsure call the office and we can put you through to an accountant who will offer free advice.
Cheap/free company formation offers
Once you’ve established you need to form a limited company make sure that you use the right company formation agent. There are plenty of cheap or free company formation offers but there is often a reason for this.
The low end prices advertised tend to only form the company and email you a copy of the incorporation certificate. (This is a good service if you are a professional or have a good understanding of company law.) You will quickly find that you are legally required to have other documents that they will charge, often over the rate, for that will enable them to make their money. These will be added on as you go through the formation process so what appears to be £35 ends up £89.
We often get disgruntled customers calling us for advice as they cannot get through to their formation agent and are unclear about what the next steps are to take.
Free offers mostly tend to obligate you to form a bank account with the formation agent’s partner as the banks pay a commission for this. Always read the small print as you will find there are significant fines from the formation agency for not opening a bank account or other service you have inadvertently signed up for.
Paying too much
Similarly paying in excess of £100 for your company formation is considered a bit steep. Unless the company administering this for you is offering other services such as VAT registration, company office and secretarial services. In many cases clients will ask or assume that only their accountants can complete the company formation. I have been shocked by some of the excessive fees that accountants are charging for a service that they simply ask their formation agent to do. To be fair, I have also been very impressed with those accountants who have added very little or no commission.
DIY
You can form a company with Companies House directly, yourself, for a fee, however you should know that around 90% of formations are formed electronically. There is a reason that even the professional accountants and lawyers opt to incorporate this way and that’s time. If you know how to accurately complete the paperwork, set up the structure and get the documents officially signed it can still take many days to get your company formed and receive the documents back from Companies House. Formation agents can do everything for you in a few hours and the good ones will provide you with all the help and additional documentation you need to get things going.
Not registering a domain
If you don’t intend to use professional looking emails or put up a website straight away you should register your domain name as soon as possible.
Rebeccadawe@yahoo.co.uk (not a professional email)
rebecca@duport.co.uk (a professional email that matches our company name. Personal email addresses, above, do not inspire confidence)
www.duport.co.uk(by registering the domain duport.co.uk we’ve been able to put our website at this Internet address)
There are professional companies registering domain names in the hope to sell them back to you at a later time for excessive fees. Check you can find a domain to match your company name and register them both at the same time.
Call us anytime for advice on any of the issues above. As always we promise there’s no obligation to use us!
