Forming a company in the UK is an exciting milestone for any entrepreneur, but it can come with some challenges — especially when you may be unfamiliar with local regulations and requirements.
With Omega, business formation in the UK has never been easier. Think of us as the “business-in-a-box” solution to help you start your new business from scratch. We can help with anything from accounting to legal services.
But even with all this help, there are still some new business formation mistakes that can feel inescapable. We want to help you avoid them. In this blog, we will break down the 5 most common mistakes businesses make and how you can avoid them.
Common Mistake 1: Choosing the Wrong Company Address
Your company address is where all your official communications will be sent, and it will be visible on the public register.
Choosing the wrong address (or a bad one) can lead to missed mail and ultimately harm your business’s credibility and legal standing. And trust us, that is the last thing you want.
Keep in mind that if you don’t want to, you do not need to use your current office or workspace. You can even use your home address if that suits you, but remember, this address will be public. So if privacy or image is a concern, you might want to look into getting a virtual address.
A virtual address offers you a professional location that keeps your personal address private and positions your business in a premium area.
Simple Solution:
Easily get a secure and premium corporate UK address with Omega.
Common Mistake 2: Not Providing Proper Documents for Sensitive Words
When forming a new business, you will have to follow the UK’s rules and regulations on name selection—and while everyone focuses on checking trademarks and ensuring that the name they choose is not being used by another business with name availability checkers (which are both incredibly important), something that often gets overlooked are sensitive words.
Sensitive words are specific words that require extra prior approval because they imply a status or function. There are about 134 sensitive words.
Words like “Bank,” “King,” “Society,” “Fund,” “Trust,” and over a hundred more sensitive words have to be approved before you can legally use them since it often suggests that you are connected to a government authority or regulated sector.
So what happens when you use these words without permission? Simple. Your application will be rejected.
To use a sensitive word within your name, you’ll need to provide supporting documents from the relevant authority. If you want to use the word “Bank” in your name, for example, you’ll need to get written approval from the Financial Conduct Authority.
Simple Solution:
Do not use sensitive words within your company unless you are willing to provide proper documentation that shows you have prior approval.
Common Mistake 3: Forming the Wrong Type of Company
In the UK, the most common types of corporations are Limited by Shares and Limited by Guarantee.
- Limited by Shares: Generally, this structure is for profit-making businesses (commercial). Shareholders own the company, and their liability is limited to the value of their shares. Profits can be distributed as dividends.
- Limited by Guarantee: Often, this is used by not-for-profits (non-profits) organisations and charities since this structure doesn’t have shareholders. Instead, guarantors agree to pay a set amount towards debts and will reinvest all profits back into the company.
Chances are, you are going to be forming a limited by shares corporation.
If needed, you can always change the type of company your business is, but it will be complex and expensive. Our advice is to do your homework and understand exactly what type of company you need your business to be before applying.
Simple Solution:
Do your research, or let the experts at Omega handle it.
Common Mistake 4: Not Registering for Corporation Tax
As much as we all hate taxes, registering for Corporation Tax is a legal obligation that must be completed within three months from the time your company is officially incorporated.
This means that all the profits your company makes (even if your business isn’t profitable yet) must be reported. Failing to do so will mean penalties and may prevent you from trading legally.
Simple Solution:
Reach out to Omega. We can help guide you through the entire registration process and provide ongoing support to keep your company compliant with tax regulations.
Common Mistake 5: Inconsistencies and Spelling Errors
Small mistakes can cause big problems. Typos, misspelt names, or inconsistent information on your application may potentially mean delays or even rejection.
Something as simple as entering “Jonh” instead of “John” or providing different versions of the same address can create unnecessary complications that will take forever to fix.
Simple Solution:
- Always use full legal names rather than initials. Writing “J. Smith” instead of “John Smith” might seem trivial, but it can affect the legitimacy and transparency of your company records. Even if some errors do not result in immediate rejection, correcting them later can be time-consuming and frustrating.
- Double check your spelling for everything. Want to take the stress out of this process? Omega can guide you through each step with meticulous attention to detail. Our platform checks for common errors and ensures all your information is consistent and accurate before submission.
Save Time by Incorporating Your Company in the UK with Omega
Online company formation in the UK has become the preferred method, with 99% of companies now registered this way, according to Companies House.
This is all thanks to built-in checks and validations. Now, with online applications, less than 10% of electronic applications are rejected, which is significantly less compared to the over 50% rejection rate for paper applications.
The risk of errors is even lower when you use a company formation platform like Omega. Our Business-in-a-Box solution offers everything you need to start, run, and grow your business, including a multi-currency account, international payments, accounting and legal services.
The process is simple:
- Choose a business name
- Complete our short online form
- Let us take care of the rest.
So save time. Streamline your UK company registration with Omega. Open your business account today!
