May 06, 2015
A company formation agent is a company or individual who will compile the paperwork necessary to register your company at Companies House in the UK, send the paperwork to them and ensure that the company is registered properly. They may also offer to maintain the records of said company there, for an additional fee.
At the time of writing many formation agents now send the formation document electronically to Companies House. This allows the formation process to be speeded up and for the cost of formation to be lowered. So you will find some agents offering to form your company for £20 GBP or less. How can they afford this?
Well, this is usually a loss-leader to extend their client list so as to sell you other products, like a registered office or telephone numbers. In order to register a company at Companies House, you need to have an office where legal documents relating to your company can be sent. This is called a Registered Office.
You could use your own home for this but many people are not comfortable with their home address being associated with their business. They want to keep their home and work separate.
They may also not wish to have people snooping around their home just because it's been used for a company formation and thus has been exported to other databases. Then there's the potential problem of unsolicited mail. Far better just to keep your business at one remove and form your company with a virtual office address.
You use the address of a third party when registering at Companies House. This shows up in their record. Letters from HMRC and Companies House will be sent to this address.
It's best to choose a formation agent who's been in business for a few years, for the sake of continuity, if you decide to use his office as your registered office. It's a chore to have to change your business address if the formation agent you chose goes out of business.
When Limited Companies are formed standard template documents are used pertaining to shares and your Memorandum and Articles of Association. These do fine for 99.99% percent of start-ups, as most entrepreneurs just want a legal corporation between them and the people they trade with.
Agents will sometimes sell you off-the-shelf companies for a fee. These can seem expensive but they offer the value of being established for some years and have gained credibility by having their records kept up-to-date. They are used by startups wishing to seem that they've been in business for longer than they have actually been or by entrepreneurs who wish to buy a particular name suited to their business.
The key thing you really want from a formation agent is support: can you get them on the phone easily? Do they respond to queries quickly? Are they willing to go the extra mile if there's a problem with your application, so that your setup is hassle-free?
Registered Address Limited is also a Company Formation Agent in the UK.