Many of those who are considering registering a company are confused by the choice of using Companies House directly or employing the services of formation agent such as ourselves.
This article seeks to provide an unbiased and practical guide of the two methods and therefore may become a useful source of information for those weighing up their options.
The comparison table below highlights these and other significant differences between incorporating a company through a modern formation agent and using the paper based alternatives.
Firstly, it should be made absolutely clear that Companies House is the only authorised body in England, Wales, Scotland and Northern Ireland who are permitted to register UK companies.
Therefore whether a person chooses to register a business directly with Companies House or through a company formation agent, the incorporation will in all cases ultimately pass through this same authorising body.
That said, the differences between submitting a registration application directly to Companies House and using services of an agent such as Complete Formations are nothing short of substantial.
These are largely due to the fact that Companies House does not provide electronic incorporation services directly to the public. The only means by which a member of the public can submit a company formation application to Companies House without using an agent is by using the traditional (and largely outdated) paper Form IN01 (previously Forms 10 and 12).
The fast electronic registration facilities which connect to Companies House databases and e-filing systems can only be utilised if a suitably equipped formation agent is used.
Their systems can be used by the public as an intermediary to communicate with the Companies House systems and thereby form a company in a fraction of the time.
In the table which follows a fuller explanation of each point is provided further down the page and by clicking on a comparison item in the table the reader will be taken to the relevant section.
Time Taken to Incorporate a Company
A typical incorporation submitted directly through Companies House using Form IN01 will take 2 to 3 weeks to complete. Using a company formation agent, the same task is accomplished usually within 3 business hours.
For a novice user who is unfamiliar with the paper incorporation documents the process can be a lot longer and expensive if professional advice is required in order to accurately fill out the documents.
The time given of 2 to 3 weeks includes both postal and processing time once it arrives at Companies House. Each application is manually checked for errors and then passed for incorporation only when no omissions or mistakes are identified.
Companies House literally receive thousands of items by post each day including statutory accounts, manually filed annual returns, resolutions, company name changes and so on.
Any paper incorporations become part of the mountain of post and understandably given the volumes of physical post received it is not uncommon for delivered items to remain unopened for several days.
Electronic company formation applications use modern technology to transmit data to Companies House in seconds. The vast majority of online registrations which are submitted are not checked manually but by faster automated systems which are capable of accurately assessing the integrity of data in minutes if not seconds.
This facilitates the average 3 hour turnover and includes allocation of a company number, the creation of the certificate of incorporation and the immediate despatch back to the formation agent and instantaneously, the client. Back to Table
Costs Involved in Formation
Companies House charge a standard fee of £40 for the formation of a UK company. There is no VAT payable on this amount.
Complete Formations Qoppa company formation service costs £24.99. It includes the Companies House registration fees and the memorandum and articles of association.
As an online registration, there is no requirement for a solicitor or other third party to verify the information and attach their signature. This is the same for all of our incorporation packages. Back to Table
Correcting Application Errors
Both experienced and novice users of company registration applications make mistakes. The mechanisms which exist to firstly highlight and then secondly to correct them produce a significant difference between applications submitted manually on paper forms and those despatched via a formation agent.
Some online agents’ incorporation systems, such as the one provided by Complete Formations have a comprehensive and automatic checking facility which can identify and highlight mistaken entries in a timely fashion.
This enables the offending items to be corrected on the spot and thus greatly increase the chances of the submission resulting in a successful registration.
Form IN01postal submissions which contain any error, incomplete or omitted information will be simply returned to the applicant for correction, essentially leading to the entire 2 to 3 week process starting again form the beginning.
It would be misleading to suggest that an automated checking system can identify all errors and mistakes and using electronic company formation systems can still result in rejected applications.
The advantage however of having an online incorporation rejected over that of a postal submission is that once the registration has failed, the offending data can be corrected online and resubmitted again for the 3 hour service.
It is therefore possible to have a company set-up on the same day having been rejected once or in some cases even twice.
In order to further minimise the instances of applications being sent back by Companies House, Complete Formations will always answer any request to view the information entered for a particular company before it has been sent for registration.
Thus, customer can (at no additional cost) have their application checked by a qualified accountant who is well versed in the reasons why particular companies fail to be incorporated at the first attempt. Back to Table
Capacity for Support
Companies House have a very extensive and knowledgeable compliment of staff who are able to advise on how to form a company using Form IN01.
This includes providing information on which details should be entered in each field and the various criteria which should be met in order to successfully register a company.
This service is available Monday to Friday 8.30 am to 6 pm.
Whilst we will not comment on the support provided by other company formation agents, Complete Formations strongly believes that extensive and high quality support and information is key top providing customers with the satisfaction they hope to achieve.
Our electronic formation system allows us to actually view the details which have been entered for a particular company and therefore diminishes the communication barrier which often exists when trying to visualise what someone has done by having them describe their actions over the telephone.
It is too often the case that parties to a telephone conversation (especially when one is a novice at the task) refer to two different matters when they both believe they are on the same page.
We often check first hand or in some cases complete the entire application process for a customer to ensure that the information being entered is correct and in accordance with what Companies House require. Back to Table
Monitoring Your Application
When an incorporation application is sent to Companies House, in the absence of using the registered mail service (and the resultant cost), there is no means of confirming for several days or more that it has been received and not in fact been lost in the post.
Once it has arrived at Companies House, been opened and logged it is possible to check its progress by telephone them during office hours.
Most formation agents and their electronic systems provide a far more detailed and cheaper means of verifying the stage their particular registration is at.
The Complete Formations system provides a confirmation message at the time the application has been electronically despatched to Companies House and visually displays its document and envelopment numbers which can be used for tracking.
The status of a submitted company can been tracked online day or night and although the results will only display one of two states, comfort can be derived from knowing with a high level of certainty that the “incorporated” message will be displayed within minutes of the company being registered.
Again, if ever when issues occur, the vastly shorter turnaround time involved with companies sent electronically means that problems are often identified and corrected sooner than with Form IN01 set-ups. Back to Table
Provision of Other Services
From our experience many of those registering a company require more than just the standard incorporation service. Popular additions to a basic package include items such as a company register, company seal and registered office service.
Whilst some of these can be sourced after a registration has taken place, Companies House does not provide these other services essentially resulting in the purchaser needed to contact several suppliers to meets their full requirements.
A registered office address is a pre-requisite for forming any UK company or limited liability partnership. Such a service is typically provided by formation agents who often include them as integral components of one or more company set-up packages.
Thus, on the basis that one or more of these ancillary services are required, the more cost and time effective approach would favour the purchasing the incorporation and other services from the agent in question. Back to Table
Range of Advice Given
The Companies House support service is without doubt very good and their staff possesses a good depth of knowledge on incorporations and the other services they provide.
Again, without commenting on the support levels of other formation agents, Complete Formations support services are staffed by qualified accountants who are apt at provide general information on the taxation of companies, registering for PAYE and VAT registration.
These are areas which appear frequently in the list of questions potential customers will ask when deciding whether or not company formation is the appropriate avenue for their business aspirations.
Whilst we can not responsibly suggest that we can provide detailed analysis or advice during a telephone conversation, we can offer general knowledge and facts on how different aspects of owning a company might impact on the initial decision on whether to register.
We are also able to suggest specific companies or other organisations which might be able to provide the required detailed information or advice sought. Back to Table
Final Thoughts
19 out of every 20 companies registered in the UK are incorporated electronically. This method has been viewed as the simpler, cheaper and more straight-forward means of forming a company over many years.
The systems involved in electronic company formation are generally well proven and are more in tune with the demands for quick supply which the internet and technology have created a thirst for.
The stark differences between registering a company directly through Companies House and using formation agents’ services lead many to choose the later option.
Complete Formations hope that this piece has provided a clear distinction between the two methods and that whichever course is chosen, the decision will be made on the basis of knowing what alternative available.
