Is using companies house the best way to set up a company?

By: WisteriaFormations

Date: 7 November 2011

So you’ve decided to start a business. Maybe you’ve concluded that setting up a company is the best route for you to follow. There are a number of different methods of company registration, and a number of people favour the direct path that is registering through Companies House. After all, any incorporation application must go through Companies House at some point, and this is a relatively inexpensive method. However, in the long-run this might not necessarily be giving your business the best start possible.

The Companies House website has a number of pages that provide basic guidance about the incorporation process. However, you are limited in the level of advice you will receive. Beyond the initial formation, Companies House is unable to give you advice on important considerations for you and your newly set-up company. Conversely, many online formations agents offer free consultations with accountants and tax advisors as part of their service, to answer any questions you have as you start-up, for example, whether you need to become VAT registered.

An important part of incorporating a company is deciding on the Articles of Association – effectively, the rules that govern the running of the company. Formation through other channels, such as an agent or your accountant, may allow you to alter the company’s Articles of Association to suit your needs. Unfortunately, this cannot be done as part of the Companies House registration procedure, because model articles are forced on all new formations.

Additionally, the service that is offered is a basic incorporation. Although this will provide you with the minimum requirements when starting a company, you cannot purchase any of the extras offered through other channels. A Registered Office address, for example, is particularly important if you are forming a UK company from abroad or if you wish to protect your privacy when trading from your home. Although this is unattainable from incorporation through Companies House, many agents will provide this.

The major benefit that most start-ups see with registering at Companies House is the comfort that they are filing the application directly. Companies House is a UK government department, and therefore, a trustworthy source to hold all of your important data. On the other hand, it is not required to make stringent anti-money-laundering checks, as an agent would. Although some may see this as necessary to speed up the process for the individual, it does increase the possibility of your details being used to fraudulently set up a company.

Whichever method you use to register a company, it’s important that it is the right type of business for you. Although the process has been made easier with online applications, it is vital that start-ups know the obligations that come with a limited company.

Will Browning of Wisteria Chartered Accountants. Find out more about setting up a limited company.