Anyone setting up a new company will be faced with administrative work to get their new business registered with Companies House and off the ground. Those who are new to the process will also have a fair amount of research to conduct. Fortunately, a company formation agent can help out with the process of incorporating a company.
Using a company formation agent allows for a more efficient and straightforward procedure, and it reduces the potential of filing errors that may lead to rejection. Furthermore, agents often offer many other useful products and services, both for new entrepreneurs and for seasoned business professionals.
What is a company formation agent?
The core service of company formation agents is, as the name suggests, to incorporate companies. This essentially covers the successful creation and registration of a new company with Companies House, so that a new business can get on its feet and begin trading. As well as the incorporation of standard limited companies (i.e. those with shares), agents will normally be able to also form companies limited by guarantee (e.g., non-profit organisations) and limited liability partnerships (LLPs).
As well as the core service of streamlining incorporation, formation agents often provide a range of products and services designed to meet the needs of startups and new business ventures, including:
- Guidance – a formation agent may be able to provide guidance for customers in terms of choosing the right company structure (e.g. limited company or LLP) and also deciding on the right package.
- Information – agents will often have a wealth of free information on their websites to help entrepreneurs with a wide variety of company formation questions (e.g. how to go about choosing a company name).
- Company secretarial support – this service can help to maintain statutory registers, prepare and file annual Confirmation Statements and carry out other administrative matters.
- Registered office address – for companies which do not have premises, being able to use an address in a business location can look more professional than using a home address, etc.
- Business bank account – formation agents often have good deals for companies which also need a new business bank account.
How do I know if a company formation agent is legitimate?
Companies House maintains a list of company formation agents that have successfully completed testing of their own formation service (i.e., they have software capable of submitting electronic incorporations) or who use the service of a third-party provider on this list.
NB: Whilst the companies on this list have been tested (or use a service which has been tested), they will all provide different levels of service, so it’s important to choose wisely (e.g. compare pricing and services offered, and look at customer reviews, etc.).
What are the advantages of using a company formation agent?
Fast turnaround and low cost
A new company can often be incorporated by an agent on the same working day, in a matter of hours (as little as 3 to 6 working hours). Because listed formations agents have their systems set up and tested with Companies House, this minimises any delays and ensures rapid incorporation.
And because formations agents deal with a high volume of incorporations, they are able to keep the cost very low. Rapid Formations offers the most essential service for as little as £12.99. If you compare this to the expense of asking an accountant to form a company, which can run into several hundred pounds, it is clear why using a formation agent can save money – often a limited resource in the early stages of a business!
Efficiency and simplicity
Setting up a company through a formation agent generally makes the process of incorporation more straightforward. This is because everything has been optimised to simplify the process for customers, making the online application extremely user friendly and cutting out any unnecessary jargon.
There will be no need to fill out form IN01, nor will any forms need to be posted to Companies House; the process is entirely paperless and everything can be done online at the click of a button.
Furthermore, if there are any questions with the online application, leading agents have a team of company formation experts who can provide specialist assistance to customers, either by online chat or over the phone. All this helps to make the overall process as streamlined as possible, and it reduces any complications which can result in mistakes or even rejected incorporation applications (see below).
Getting it right first time – how formation agents can help avoid rejection
As well as providing assistance with any questions relating to the completion of incorporation applications, company formation agents are also able to review the submitted application. They will routinely and carefully check the information which has been provided and flag up anything which could hinder the progress of the application (e.g. typos, missing sections and other errors) with Companies House. This vital review procedure helps to ensure that each application is successful, and reduces the possibility of rejection due to minor discrepancies and mistakes.
Once the pre-submission checking process is complete, the formation agent will submit the application to Companies House electronically, which ensures a speedy registration and protects sensitive data.
The leading company formation agents will have a team of experts on hand to provide valuable assistance to their customers during the application process, guiding them, step by step, to achieve a successful outcome. As well as helping with the application itself, they can advise on the optimal company structure for the specific business, and answer various formation questions pertaining to issues such as: issuing company shares, appointing directors, rules about company names and addresses, etc.
And once the company has been registered with Companies House, company formation agents will be able to continue to offer a range of helpful services such as assistance with filing and reporting obligation, and even full secretarial support. Normally each customer will have access to their online account where they can manage their company details and make any changes necessary.
Incorporation of different types of company structure
A wider range of company structures can normally be incorporated online via a company formation agent, including:
- Private companies limited by shares
- Private companies limited by guarantee
- Limited liability partnerships (LLP)
It is currently only possible to register the first of these (private companies limited by shares) directly with Companies House online. Although other types of company structure can be registered with Companies House directly, these will generally require the use of paper forms and post, or access to expensive third party software.
Furthermore, companies registering directly online need to adopt the standard (model) articles of association, so there is less flexibility. It is worth noting that there is not only a higher cost to postal registration, but also a significantly greater chance of the application being rejected. Furthermore, the turnaround time for registration is much longer – several working days compared to a matter of hours.
Because formation agents have access to electronic submission software, they are able to incorporate a wider range of company structures, as well as bespoke articles of association – and all without much difference in cost and without the delays and uncertainties of postal applications.
As well as their core services, a well-established company formation agent is able to provide a wide range of valuable business services to their customers, often at little additional cost. These include:
- Address services – company directors and others will need to provide a service address for any official correspondence. Separately, a registered office address is required for the companies register as well as for other purposes. Although a home address can be used, many businesses without a physical office prefer to use an address service provided by a formation agent.
- Company secretarial services – some agents provide full secretarial support, which helps business owners make various changes to their company, and can prepare and file annual Confirmation Statements, etc. This provides peace of mind that all company secretarial aspects of the business are being managed professionally – and without the expense of paying a dedicated company secretary.
- Business telephone services – rather than providing a mobile number or home number to customers, small home-based businesses can take advantage of a unique London or regional phone number which comes with its own call answering service.
- Confirmation statement – all companies are legally required to submit a ‘confirmation statement’ (previously known as an Annual Return) each and every year to Companies House. The confirmation statement essentially sets out the relevant details of a company (such as the most recent address, current directors, etc.) so that Companies House has all the latest information. A confirmation statement filing service can help to keep companies on top of their legal compliance requirements.
- Issue of shares – the issue of shares is the process by which companies create new shares to pass onto new (or existing) shareholders. Some formation agents are able to offer an issue of shares service.