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Company formations debate: Where do accountants stand?

2nd Mar 2012
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Incorporation, company formation and shareholder issues have been a constant issue in 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.

Also see

The Company Secretary - discussion group

Company secretarial articles - including 'Get the details right' checklists from Jennifer Adams

Replies (4)

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By adamineden
02nd Mar 2012 12:33

UK company formations

As a chartered secretary in public practice, I regard company formations as a loss leader as a starting point. I would be looking for the ongoing secretarial work and to establish a relationship with potential clients. I've worked with legal and accounting practices both large and small, and it should be accepted that there is little or no money in bog standard private company formations. Furthermore, you generally get what you pay for. A basic formation may often do the trick, but too often it is a false economy when anything more particular is needed such as pre-emption rights. Some clients have gone the cheap route and later found themselves with a large bill for rectification work. So agreed - value over price. Get the detail right in the first place and it could save you a lot of aggro down the road.

I don't have a problem with company formations being offered by Companies House as I'm not looking to compete on price, but do be aware of the scope and limitations.


Thanks (1)
By [email protected]
02nd Mar 2012 18:55


we manage to make a great profit still from formations. if your client wants you to do it charge the time for it.

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By ryedaleman
06th Mar 2012 12:31

Company Formations

We have clients who wanted us to do it and are happy to pay a reasonable rate for doing so and others who came to us with a company already formed

Does not contribute much to the debate but that is how it is

We could have the same debate about what we all charge for doing Tax Returns and whether companies do it themselves or outsource

We will take them either way




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By MikeH
13th Mar 2012 13:05

You get what you pay for

Accountants know they can form a company for £18 at Companies House (CH) but they know the service is very limited. Limited advice, limited options, limited post formation advice and limited customer service. There are also alternatives to CH that are less than £18 but again these are typically limited in their offerings too. If you want a limited service go and get it.

It may be argued that the same applies to accounting firms. You often get what you pay for. There are many ‘online accountants’ offering cheap accounting, but it does not mean it is right for your business. I have often discussed that a good accountant should save you and your business money.  

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