Starting a business can be really exciting, but at the same time comes with a lot of work. This means you might come across many administrative tasks that need to be completed before you actually start a business or can legally operate. One of these tasks is getting your business registered with Companies House. And sometimes even after quite a bit of work on your end, it's important to remember that there is never a guarantee that Companies House will accept your application. The best thing to do is to make sure you follow as closely as possible to all instructions and double-chck everything!
But don’t let this dishearten you. Filing a correct and precise application is not as complex as it sounds. It simply requires you to be more informed and reasonably careful when you are filing your registration application. Today, we’ll explore all the reasons that may cause a potential risk of your application being rejected and what you can do to avoid these pitfalls. So let’s dive in!
Reason 1: Errors in the application form
This is probably one of the most common reasons why Companies House may reject an application. This can happen due to multiple reasons - such as typos, misspelt names, missing information or incorrect addresses.
The application form usually requires you to answer questions, similar to any other registration process. If you get confused here or end up making some negligent errors, then your application is most likely to be rejected.
To avoid such careless errors in the application form, it’s important to take out time to fill your application form carefully. Make sure you start reading the instructions given by Companies House, so you know exactly how you need to proceed.
Here's a hack to check that you've left no errors - once you've filled out the application form, make sure to double-check your information. Next, take a break and come back to review it later! With fresh eyes, you’re more likely to spot any mistakes or missed out fields that may have happened the first time around.
It’s also a good idea to get your application reviewed by someone else - maybe a friend or your business partner. A fresh pair of eyes can identify errors that you might have missed.
Additionally, if your application is rejected due to some errors, you don’t need to panic. Generally, Companies House will give you a substantial reason for rejection and you will be given the opportunity to rectify mistakes and resubmit your application. But this process can be time-consuming, and so, it’s worth taking the time to try and get it right the first time. .
Reason 2: Company Name
Picking a company name can be exciting! You probably though about it a lot through to settle for that one "trailblazing" company name. But it’s worth noting that Companies House has laid down strict rules about what names can be registered - so it’s important to choose a name that meets their requirements as well.
If your chosen company name is very similar to an existing company name, you may face difficulties in getting approved. This is because a similar name could confuse your customers, and potentially infringe on another company’s intellectual property rights.
To avoid this problem, conduct thorough research before settling on a name for your business. The easiest way to do this is by visiting the free name availability checker on the Companies House website This will give you a clearer idea if the name you have in mind is available or not - and whether it fits Companies House’s requirements.
You also need to be careful not to use names that are deemed sensitive or offensive. For example, you should not consider using names that are discriminatory or suggest a connection to the government agency or authority.
Let's understand this in more detail - there are some strict rules about the usage of certain words in a company name. Some things that can cause potential risk to your application are:
- Words that show a connection to a government agency like “Crown” or “Police”
- Discriminatory words, such as those referencing ethnicity, gender, religion, or sexual orientation
- Words that highlight status or qualification like “Bank,” “Institute,” or “University” - unless your company is actually registered in that profession.
- Words that bring to the notice a link to a particular profession like “Doctor” or “Lawyer” - unless your company is actually registered in that profession
If your chosen company name gets rejected for any reason, you need to brainstorm some additional names that meet the criteria. At the same time, you will need to redo your application with this new company name. And not to mention, this will simply increase your waiting time and delay your company formation process. So make sure you are going ahead with a well-researched and appropriate company name.
Reason 3: The registered office is not based in the UK
When you are registering your company, you will be asked to provide a registered address in the UK. This is a mandatory requirement set by the Companies House, and failure to do so will lead to your application being rejected..
This is because the government needs a physical address to send you official documents and legal notices. So even if you are setting up a company as an expat in the UK, you will be required to share your company’s physical address while filing your application. This address will be publicly available on the Companies House website and other public registers.
Besides being a mandatory requirement, a company address also assures your customers, suppliers and other stakeholders that the company is a legitimate and serious business entity.
Moreover, the company can receive correspondence from HMRC as well as other government bodies.
Note that, you don’t particularly have to invest in an office building or space. You can register either your own business address (if you have one) or you can use the address of a friend, family or relative.
It’s also possible to separate your office address and trading address. So if you want to set up your office address at one location and conduct your business operations from a different location, it is possible to do so.
The bottom line is that before registering your firm, you must offer a legitimate UK-based registered office address. If you are unsure how to obtain one, you can always seek the advice of a specialist to better understand your options.
Reason 4: Details of Company Officer
When you are registering a new company with Companies House, you are required to submit details of all your company officers. So, make sure to provide accurate and complete details of all your directors and company secretaries.
The information often includes their full names and middle names. If you are just providing random abbreviated, informal or misspelt names, then it can result in your application getting rejected.
You will also need to provide the officer’s residential address rather than a commercial one and ensure that it matches with their country of residence. If there’s a case where the director wishes to keep their residential address private, they can do that by applying for a Section 243 exemption. But, here’s something to bear in mind - the director needs to provide supporting evidence with their incorporation application.
It's also important to provide the officer's residential address, rather than a commercial address, and ensure that it matches their country of residence. If a director wishes to keep their residential address private, they can apply for a Section 243 exemption. But they must provide supporting evidence with their incorporation application.
Another important aspect to consider is the age of the director. Make sure the directors of the company are at least 16 years old and at least one of the company’s directors must be a ‘natural’ (human) director, rather than only corporate directors. Also, remember that the company director you choose is legally allowed to play the role of director in a company.
To avoid issues with company officer details, make sure to carefully review and double-check all information provided in the incorporation application.
Reason 5: The company formed is a shareholder of itself
When you form a company, you have the option to issue shares to shareholders - this is a portion of ownership in the company. However, here's the deal- your company cannot simply buy its own shares as it is not allowed under UK company law. While it might sound strange, it can happen by mistake or some negligence. This is when you can expect the Companies House to reject your application.
When a company issues shares, it is typically to raise money from outside investors who become shareholders in the company. Your company can hold shares in other companies, but not hold shares within itself.
If we understand this, technically a company cannot own itself, and so it does not make sense to Companies House if you are doing so. To avoid this situation, make sure you fully understand the rules around buying and selling the shares of your company.
Reason 6: Incorrect payment or missing fees
Registering your business with Companies House involves certain fees.The company owner is responsible to pay this fee to the government. If there are any gaps in the payment or you underpay the mentioned amount, then your application is most likely to be rejected.
It's also important to know that this fee depends on the type of your company structure and the method of registration you have chosen.
For example, your fee for registering a private limited company online will be £12. On the other hand, you will be paying £40 for the same registration if you choose to file an application through post. Mostly, mistakes like incorrect payments or missing fees may occur when you are sending your application by post. So, make sure you are properly reading the mentioned information and the associated fee involved before sending your documents to Companies House.
It's also important to make sure that you pay the fees using an accepted payment method. Companies House accepts payments by debit or credit card, bank transfer, or cheque.
Reason 7: Incorrect Articles of Association
When you are submitting your application, you will also be asked to provide articles of association. In simple terms, this is an important document that gives a roadmap to how your company will operate. If you are unsure about this document, you can use the model articles of association provided by the Companies House, which are suitable for most private limited companies. But, some business owners prefer to use bespoke articles of association - which are tailored to their specific needs.
While this is acceptable, it can be a quite complex document and is prone to errors. Even some minor mistakes or complexities in this document can result in rejection!
Many business owners often seek professional help to draft their articles of association. If you are also confused about one, make sure to get in touch with an accountant who can guide you through this process.
How to register with Companies House in the UK?
So, now that you are aware of the potential risks of rejections, it's easier for you to set up your company in the UK. And, the best part is that now is a great time to do so! This is because Companies House has made the process quite straightforward and really easy for anyone to get started. Here’s what it looks like:
- Choose a company name: As mentioned earlier, make sure to choose a unique and well-researched company name for your business. A good company name in the UK can come in really handy to attract customers and investors.
- Choose your company structure: Now it’s time to choose the type of company you wish to run. Usually, the most common type of company structure is a private limited company. But, you can always explore options and understand which fits best into your requirements.
- Register with Companies House: The next and probably most important step. Here, you will need to be ready with a few documents and provide some details about your company. To do so, you can head over to the Companies House website and get started with the registration.
- Pay the registration fee: After submitting relevant documents, you will be paying a minimal fee to the Companies House. This will depend on the type of company you choose and the mode of application.
- Set up a company bank account: While this is not a mandatory requirement, setting up a business account can make your life easier in the UK. A handy business account will help you to manage all your finances in one place while helping you get the best out of tax season. In fact, some digital banks and financial management platforms can set up your business account without any cost.
- Register for taxes: Once you have your company set up, you will need to register for your company’s corporation tax, VAT (if applicable) and PAYE, if you plan to expand your company by hiring employees. If you fail to comply with tax regulations, you might end up with heavy penalties and even have to face legal action.
- Keep your records up to date: This is probably the most underrated aspect of running a company but keeps your business afloat in the UK. As a registered company, make sure to keep your financial records up-to-date. This will help you to file annual accounts and confirmation statements with Companies House on time.
You can register your company with Companies House and begin operating as a legal entity in the UK by following these steps. It's important to seek professional advice if you're unsure about any aspect of the registration process - just to avoid any potential issues or delays.