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23 August 2017 You are not logged in. Login now.

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SFS News

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10 common mistakes when forming a company

company formation yes noMany people will tell you that forming a company is easy. In fact, you can form your company online with no advice or guidance from us right now. Unfortunately mistakes are often made that are easily avoidable.

If you enter your company formation details online today we will have your application completed in just a few hours. The process is totally automated and you can pay online. Whilst our website has many built in safety checks there are still common errors that clients make from time to time.

So what are the mistakes you can avoid?


  1. Typos and Spelling Mistakes. It may sound obvious but many formations include one or two typing errors. Misspelt company names and incorrect director names or addresses are the most common. We provide a final review screen online before you submit the application. Please double check all of your data.
  2. Incorrect company names. In addition to typos causing errors in company names we frequently get clients contacting us asking to amend the company name after it has been submitted to Companies House for registration. It is not possible to pull an application back from the system once it has been delivered to Companies House so we strongly recommend you think about your company name before pressing the submit button. It is possible to change the name post incorporation but this incurs fees and the change will be permanently recorded in the company’s history.
  3. Not checking your intended company name is suitable. There are many words that are sensitive or restricted. Companies House protects certain words and they can only be used under specific circumstances. Check your company name is available and not protected. Our company registration system will run this check for you when you enter the company name.
  4. Forming the wrong type of company. The vast majority of limited companies are registered for the purpose of running a profit making business. For this purpose a company ‘limited by shares’ is often the ideal solution. If however you are running a not for profit organisation that wants to be protected by limited liability then a shares company is unlikely to be the correct type of company. More commonly a ‘company limited by guarantee’ is used for non-profit making purposes such as charities or clubs. Occasionally clients select the wrong company type. It is not currently possible to switch from being a shares company to a guarantee company so resolving this error is time consuming and incurs extra costs.
  5. Appointing minors. Under the Companies Act a company director cannot be less than 16 years old. We do not recommend that you appoint anyone under 18 years of age as a company director or shareholder. Doing so can affect your bank account application and business contracts in the future as minors may not be able to legally enter into contracts.
  6. Adding too many directors. Not all employees should be directors and not all shareholders should be directors. It is important that anyone being appointed as a company director is aware of their legal responsibilities and is happy to accept them.
  7. Adding too many shareholders. Similar to the above point not all directors ‘running’ the company should be shareholders and ‘owners’ of the company. Shareholders are entitled to a share of the profits and have rights within the company. You should consider who you actually want to be a shareholder and therefore owner of the business.
  8. Incorrect share allocation. When forming a company you can add different share classes, issue different amounts of shares and create different rights for each share class. Some companies are formed without considering how to structure the shares correctly. Correcting share allocation after the company has been formed can be complicated and may incur costs.
  9. Entering the wrong registered address. All UK companies must have an effective address for the registered office. Any application with a PO Box address or an incomplete address may be rejected by Companies House.
  10. Incorrect supporting data. When an application is made with a sensitive/restricted name you may need to add supporting data for Companies House to aid your application. This data must be in the correct format, worded correctly and meet the requirements laid down by the registrar.


This list is not exhaustive and there are other mistakes that can be made during the company formation process. We recommend all customers double check their details before submitting a new application. Mistakes can normally be fixed at a later date but a few minutes spent before submission can save a lot of time later.

If you have made an error with your company formation please contact one of our advisors who will be happy to help you fix the problem. SFS can assist you in resolving most mistakes within just a few hours.

If you would like to register a new company please see the following web page for details - company registration service

About the Author Mike Harris:
I have been providing advice and support to companies for over 15 years through my company Small Firms Services Ltd. You can follow me on Google+ and also twitter