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Mistakes to avoid with Company Formation

Company formation is an easy task and often an exciting one. Whether you are starting a new company or moving up from a sole trader or partnership, it's an important step. But as with anything, without knowing what you're doing or if you become confused, you can often miss out important information or just generally make a mistake.

We've summed up some common mistakes that are made during the formation process to help you make sure you don't make the same mistakes.

The Wrong Address

Whether you're entering the registered address, or the service address, it's not unusual to incorporate a new company with the wrong address. It's worth remembering that the address you set as your registered address is publicly available on the Companies House website, so if you don't want your home address being shown, use a different one if possible.

What address could I use instead?

If you don't have another address to use such as an office or workplace address, some companies use their accountants address - but always check before using it. The other alternative is to use a virtual address. There are various providers of these. Company Wizard also offers the use of its London address (this can be selected during the incorporation process).

What's the difference between a Service Address and Registered Address?

It's a good question! We looked at this recently in another blog post. Take a look here.

Forming the Wrong Company

There are a few different choices when incorporating the company. From Limited Company by Shares, to Limited Company by Guarantee, from Dormant Companies to Limited Liability Partnerships. Confused? Don't panic!

Research which is best suited to your business. If you're unsure, seek advice from your accountant or business advisor. Don't select a type just because it sounds right. We also have some key points on our website which we'd recommend reading too:

Corporation Tax & PAYE

If you're moving up from a sole trader, this will be a new area to you. But as a Limited Company you have a legal duty to register for Corporation Tax within 3 months of starting to do business. Failing to do this can result in a penalty.


As a sole trader, there's no legal separation between the proprietor and the business. This changes when you become a limited company as the business becomes it's own legal entity. For a director to take pay from the company, the business needs to be registered as an employer and set up a payroll - even if it's just one director.

Make sure you register. If you're unsure about the tax area of your business, we'd recommend speaking to your accountant or HMRC themselves.

Issuing Shares

If you're incorporating a company by shares, then you will need to specify details of this during the incorporation process. Most companies choose a nominal amount, usually around the £1 mark, and issues just 1 share. This defines the amount that the director is liable for. So consider this if you're thinking of issuing 100, 1,000 or even 1,000,000 shares at £1 each.

Shares also need to be accounted for by the company. Some choose to issue shares pound-for-pound to represent the true investment they are putting into the business. But consider this when you're thinking of the amount of shares to issue.

Starting the Process

If you're ready to go, you can go on ahead and incorporate your business today with Company Wizard. It's quick and easy too.

Start a basic application now

I have more questions!
Contact us by email or phone and we'll try our best to help you. Whether this is during the incorporation process, or before - we're here to help.

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