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5 frightful mistakes made when forming and running a limited company
Halloween is the perfect time to cast a wary eye over some of the common mistakes made when forming and running a limited company. Be warned, what follows is not for the faint of heart…
Hellish spelling of the company name
Whilst our system can check if a company name is available with Companies House (the governing body for UK limited companies), it can’t check if the name entered is spelt correctly. Once a company has been formed the name can be changed… but for a fee. And even then, the old name will still be on the company’s records (plus the Certificate of Incorporation will always include the wrongly spelt version).
Therefore we always recommend triple-checking the spelling before submitting your company formation request to Companies House.
Entering the incorrect date-of-birth for a director is surprisingly common and there’s no easy fix:
If the director was appointed at the same time that the company was formed then Companies House recommend seeking “legal advice”. Not very helpful we know.
If the director was appointed after the company was formed you need to complete the AP01 form at the same time as completing a RP04 form. Once filed Companies House will be in touch if anything else is required.
Far easier to enter it correctly first-time-round!
Abnormal allotment of shares
If a limited company were to go bust (ghastly enough) then the shareholders are liable to pay for any unpaid shares in the company. Therefore we don’t recommend allocating shares worth £1million each to your shareholders.
It’s far safer starting out with a small allocation (such as shares worth £1). If you are worried that your share value is too much (or you have allocated too many) we recommend contacting Companies House for further advice as any resolution depends on exact circumstance.
Horrific handling of the webfiling authentication code
The webfiling authentication code is a 6 alphanumeric code that is distributed by Companies House to the registered office upon incorporation (if your company was formed by us you will find the code on your company admin page).
It’s imperative that this code is handled with care; if it falls into the wrong hands some serious damage can be done. For example, with this code you could:
• Resign an existing director
• Appoint a new director
• Add new shares to the company
• File an annual return
• Change the registered office
• Change the accounting reference date
• And more
Menacing mix-up of Confirmation Statement and Annual Accounts
This one really chills our bones. The confirmation statement and annual accounts are two very different compulsory filing obligations for a limited company.
The confirmation statement is a “snapshot” of general company information whilst annual accounts deal with company finances.
Unfortunately, it’s often assumed that they’re the same thing. This can result in a fine (if annual accounts are delivered late) or in the dissolution of the company (if either is not delivered at all).
See here for more information: A limited company’s annual requirements
Relax, that’s the end of the list…
Or is it? Get in touch if you think we’ve left anything off (or if you have any questions). Happy Halloween!