Comparing Online and Offline Business Incorporations
October 13th, 2008 . by GrahamFThe following table highlights the differences between online and offline company formations and compares the features so that the full contrast of both methods of registering a company can be easily identified.
| Factor | Online Business Incorporations | Offline Business Incorporations |
| Time taken to incorporate | The prescribed time for electronic company formations is five working days. However in reality most online business incorporations take as little as one to four hours to come through. | The official time for paper submissions is two weeks; however any errors in completing the forms will result in delays whilst they are corrected. |
| Ease of completing application | Generally, the online applications are easier to complete without any errors occurring. Many company formation systems provide data validation features, for example, if a number is entered in a field which mandates that only alphabetic characters should be used, then the program can highlight this fact to the applicant and allow them to change the entry before sending it to Companies House for review and eventual rejection. | Forms 10 and 12 provide very little instruction in themselves. A separate information pack is available which offers guidance on filling out the documents, although for a novice the process can still be very difficult. Unless as person is fluent in the company registration terms and language used, the usefulness of such guidance may be limited. |
| Notification of submission | Most online company formations provide confirmation that the application has been sent to Companies House and barring any email problems, there can be a high degree of certainty that the submission had been received and will then be processed. | Offline incorporations would require the submitter to send the application by recorded or registered post and thereby provide some form of tracking of the documents. |
| Notification of results | Both positive and negative responses from Companies House are usually immediately relayed to the company formation agent, who in turn would contact the purchaser. This process usually happens instantaneously, the moment that a communication is sent through. | Notification for offline company formations is carried out via the postal system and so it can be a few days before dispatch is actually in the hands of the intended recipient. |
| Costs | Electronic business incorporations can cost £20 or more. The cheapest three hour service available at the time of writing is £24.99 for a basis package which then increases as more features such as registered offices and so on are added to the shopping list. | Companies House charge a standard amount of £15 per incorporation and £30 for a same day service. The latter service runs from the time the application is received by the Registrar of Companies and so postal time has to be built in to the overall equation. |
| Additional services | Many company formation agents offering online business registration services also provide ancillary items such as company registers, seals and registered office facilities. They may also provide nominees for companies set-up using their systems. | Companies House offer basis incorporation services with few add-ons, therefore offline applications can not contained orders for any of these additional items which would have to be sourced separately, probably from a formation agent or legal stationers. |
| Other factors | Online business incorporations are generally the preferred option for registering a UK company as they offer a simpler method of communication and often ensure that set-up application contain fewer omissions and mistakes. They are viewed as being more user-friendly and do not require professional verification which might be costly.
Provided the company formation agent has a good registration system and can offer patient and accurate support and advice, the electronic company set-up option is usually the quickest and cheapest option for both the general public and intermediaries who form companies on behalf of others. |
Offline incorporations have the added expense of requiring a solicitor to verify the signature of the declarant, shareholders and company directors. This expense could be quite large particularly if there is general advice and explanation time included in the fees.Paper company formations are becoming rarer as more people discover the convenience of the online method.
Their only advantage is the registration fee is lower but all other potential charges overweigh the small amount initially saved and the scope for rejections from Companies House increases significantly. |