Company formations debate: Where do accountants stand?
Incorporation, company formation and shareholder issues have been a constant issue in AccountingWEB.co.uk recent years, so we’ve enlisted the support of two leading company agents to explore the issues and consider the questions accountants need to answer:
- What has been the impact of the low-cost Companies House Direct service?
- How much time and energy do accountants have to devote to formations?
- What kind of agent should they look to work with?
- To what extent can company formation act as a vehicle for adding value to the client relationship?
In the one corner, we have Jordans, one of the grand names in the business, offering a range of corporate and information services to the professional advisers’ market. As a high value supplier, Jordans looks to work with accountants to help them enhance formation and secretarial processes. “Advice before, during and after formation is what differentiates Jordans’ service,” says eBusiness manager Dave Percival.
Formations Direct pioneered a lower margin solution that is designed to lift as much of the burden as possible from accountants’ shoulders, so they can spend more time focusing on their clients. They will argue that accountants who get too involved in complex formations are wasting their time. “We built our business catering for practitioners who understand that the best way to work is to bring in third party experts when you need them,” says managing director Norman Younger.
Although they will be taking different sides in our company formations debate, both Jordans and Formations Direct agree on a number of points.
Since Companies House Direct entered the market with its £18 formations service, they have had a profound effect - capturing roughly 17% of formations business. The move has provoked a price war among agents and completely changed the industry dynamics, leaving many accountants wondering whether to stick with their preferred suppliers, or to consider alternatives.
Jordans and Formations Direct both agree that value rather than price should be the driving criteria for a company formation service. When it comes to anything more than a very basic formation, the Companies House model articles are proving problematic, for example if a company wants to create and issue new classes of shares.
All of these issues will be explored over the coming month in our formations debate - but we need your help. Once our two lead speakers have had their say, we’re looking for AccountingWEB members to illuminate the conversation with their comments and questions.
What are the aspects of forming a company that give you the most trouble, and what do you look for in an agent? With your help, we plan to come up with some concrete conclusions and a more comprehensive guide to the mechanics of company formation. Feel free to continue the discussion below and look out for the first instalment of the debate next week.
The Company Secretary - discussion group
Company secretarial articles - including 'Get the details right' checklists from Jennifer Adams