With all the company formation services available on the internet it is completely reasonable to expect a novice entrepreneur to ask which company formation package do they require.
The range of company incorporation services on offer include those which provide entirely electronic documents, usually in Microsoft Word or Adobe PDF format to company formations which include seals, virtual offices and statutory company registers.
Whilst some entrepreneurs might be tempted to select the most expensive and comprehensive company formation package they can locate, they might be well advised to consider carefully their actual requirements and obtain a service which closely matches their particular circumstances.
For example, a sole trader judging which company formation service to choose to simply protect their business name and essentially reserve it should they wish to transfer their activities to a limited company, might achieve this goal by opting for a cheaper style incorporation which provide solely electronic documentation.
Conversely, individuals who are resident abroad with no physical UK presence might be better suited to a more elaborate company formation package which includes at the very least a registered office facility.
One aspect of the Companies Act 2006 (and others before it) which might affect which company formation service is chosen is the requirement for all UK incorporated entities to keep and maintain company statutory books and records.
Whilst this prima facie suggests that any company formation service not including a physical statutory company register or the equivalent online facility should not be considered, depending on the complexity of these records, it may be possible for them to be created and maintained by some other means.
For example, an Excel spreadsheet is sometimes used where a company is incorporated with a single person acting as both sole director and shareholder of the business. In this instance the maintenance of the company’s statutory books would be far from arduous and a full set of company registers capable of accommodating 10 or more directors and shareholders might be seen as excessive.
Another point of law which might influence which company formation package is chosen is the changed requirement on company seals. It is no longer mandatory for a company to have one of these instruments and whilst they might be useful in embossing official documentation, some entrepreneurs would not find an adequate use for them.
Many company formation services suggest that the net cost of registering the entity would be zero or even result in a net gain for the purchaser. These are conditional upon the entrepreneur using the agent’s banking referral service whereby they earn sufficient commission to compensate the purchaser and have a surplus for themselves.
The granting of the bank account is by no means guaranteed and the small print will reveal what happens in the event the application is declined. Given the relatively small costs of some company formation packages, it is perhaps a false economy to suggest that opening an account with a bank that is not the first choice of the entrepreneur simply to gain £30 is not justified.
The location of a registered office facility might have a strong influence on which company formation service is suitable. Some agents provide locations in the City of London, Central London and other provincial towns and cities in the UK.
Those wanting to use a third party registered office facility and be incorporated in a particular jurisdiction (England, Wales, Scotland or Northern Ireland) might choose a company formation service provider which offers these locations.
The essence of which company formation service to choose is that of selecting a provider whose offerings mirror and at least closely match the requirements of the entrepreneur. By viewing the substance of the individual elements and features contained within a particular package and largely ignoring some of the unsubstantiated claims made by a formation agent, it is likely that a match can be achieved.
