Having made the decision to form a limited company to operate your business you may now be considering whether to form the company yourself or to use a company formation agent. Whilst paper applications can still be made at Companies House the process is not necessarily the easiest route. For a start it takes around 5-10 working days to complete a manual company formation. The costs may not be as low as first anticipated and it all takes up your valuable time.

It is understandable that many may still people believe that the DIY route of forming a company manually is the cheapest. A quick phone call to Companies House will lead to an information pack being promptly posted to your home or place of business. This pack will include the basic application forms and further advice on what needs to be done. Forms 10 and 12 will need to be prepared and a signature from a solicitor, commissioner for oaths, notary public or justice of the peace is required on form 12. This signature can be purchased for around £5 to £20 depending on the individual that you speak to. In addition to this you will need to purchase a set of Memorandum & Articles of Association which explains what your company will do and how it operates its internal affairs. These are available form many sources and vary in quality considerably.

It may help to consider the cost implications of a DIY company formation before taking the first step. Therefore the costs are broken down here to highlight the full cost of a formation-

Companies House government fee £20
Solicitor’s signature £5 to £20
Memorandum & Articles of Association £10 to £20

These are the basic start up costs. However they do not include other documents that are legally required or useful once the company is formed. Additional documents also include-

Company registers £5 to £20
Share Certificates £2 to £20
First minutes of the company £2 to £10

Therefore at a minimum your DIY company costs approximately £35. This will not include all of the legally required documents and the content and quality of the documents may be poor. At the other end of the scale you may spare no expense in buying your company documents and splash out well over £100. These costs do not consider your own personal time. How much is your time worth? Unfortunately most people do not live next door to a solicitor or commissioner for oaths so you have to arrange an appointment to get your signature. Often applications include errors that get rejected by Companies House adding to the time spent on your formation. A rejected application means another trip to the solicitor and yet more delays.

There is however a very simple alternative. Many company formation agents like Simple Formations have invested in state of the art software to form companies. This is made available to the general public through integrated websites that can process your company formation online.

Cutting to the chase lets look at the costs involved. A site like www.simpleformations.com charge £34.95 including VAT and all charges. The inclusive fee also includes the standard £15 online government charge for online incorporations. So what do you get for your money? The basic package includes an electronic copy of the all the legally required documents and additional forms like your share certificates. Full details are below-

Documents included in your company formation-

Certificate of Incorporation
Memorandum of Association
Articles of Association
Company Registers
Share Certificates
First Minutes

Having saved money, an online company formation will also save you time. Completing the online forms should take no more time than completing the manual forms. In addition mistakes are easily corrected whilst you type. Most people take about 10 minutes entering their details. There is no need to get a solicitors signature on your forms. The online systems include secure electronic signatures so you need not leave the comfort of your home or office. If for any reason your company formation is rejected then the error can be fixed and the formation re-submitted without any additional charges. Electronic formations take approximately 2-3 hours, which is considerably faster than manual applications.

Whilst this may not read as an objective overview of forming a limited company with a manual application, it is difficult to find positives with the manual DIY process. Accountants and solicitors now use agents to form their companies for their clients. Companies House encourage electronic incorporations with a reduced fee.  In today’s ecommerce world, with safe and secure online sites the days of the manual application are numbered.