Is It Better to use a Company Formation Agent?
September 28th, 2008 . by LooseleafI am planning to form a company and was wondering whether it would be better to do this via Companies House directly, using an Accountant or solicitor or a company formation agent.
On carrying out some research I found that the accountant that was recommended to me would charge a total of £250 + VAT for registering the company and an hour of tax advice. Whilst this has obvious advantages in terms of the tax, I do wonder just how much personalised recommendations I would receive. After all, it would take me about two hours to just relay and explain my personal financial circumstances.
The option of using a company formation agent seemed to be the optimal solution as I could register my business for about £30, giving an immediate saving of £220. Even with some of the premier packages offered by the incorporation agents I would still be less with money compared to the Accountants solution.
Starting my own business, I suppose I should get use to cutting costs and carrying out research of taxation and other matters on my own.
The direct application through Companies House was a non starter. From what I read, these company formations are thwart with complications, form errors and takes about three weeks to receive a certificate of incorporation.
Prior to investigating company formations, this was a subject I knew nothing about and I am delighted that I was able to comprehend and evaluate the options so that I could reach an information conclusion. There is hope in starting a business for me yet.
I completely agree with what you said about the company formation agent option. I must say that if you can master in the ins and outs of the UK taxation system without formal training, then you are very gifted.
Although, it might have only been an hour with the Accountant, it might have highlighted some important areas in your personal circumstances. If this service is offered as standard then I suspect that most of the basic advice would have been dispensed with quickly, leaving a reasonably portion of time to deal with the idiosyncrasies of your situation.
The importance of seeking appropriate professional advice at the start of a business venture can not be overstated because as an Accountant myself, I continually hear clients say that they wish they had spoken to me sooner.
There are a number of Accountants who have started offering fixed price services which includes advice. You might want to take a look at these so that you are comfortable in knowing what you are receiving for each pound spent.
I wish you all the luck with your new company, especially in the current economic climate.
Your points are well made and taken. It was not that I was under-estimating the usefulness of trained professionals or purporting to be able to become an Accountant online.
The choice was largely based on having a tight budget for the purposes of starting my business and the company formation agent option seemed to deliver both speed and cost efficiency at a time when this was important.
The company will be involved in selling stationery products online and I am aware that this is a vastly competitive market place, even before the current economic woes. My plan is there to keeps costs as low as possible and until the new business is generating sufficient cash, I will resist incurring expenditure for something which might not work out.
In terms of starting up, I just need the company and enough basic knowledge to begin trading and then I can loosen the purse strings a little as thing progress.
I have been involved in forming companies for clients of my Solicitors practice for over ten years and have witnessed the transition towards clients incorporating their businesses themselves in order to save costs.
The company formation work carried out by the firm is now largely based on satisfying the requirement of corporate clients who might deal in property or the purchase of a business.
The retail side as we refer to it, where the practice is approached by an individual wanting a company to start their business has all but vanished.
The charges for this service were high compared to the person going directly to a formation agent, but to be honest, the time each one took in terms and obtaining details of directors, secretaries and subscribers did not leave much profit based on the prevailing charge out rates.
There were frequently omissions of information or errors which meant that there was constantly back and forth before the application would be complete and ready to be submitted.
Now with corporate clients companies are formed in advance using nominees and kept on the shelf. As the company name is largely insignificant for a commercial transaction the process is certainly much smoother.
I for one do not miss private individuals’ company formation business, the elongated process of information gathering and then the unhappiness concerning the bill.
The introduction of online business incorporation facilities and the willingness of the public to use them is the free market economy working at it finest.