Company formations are basically the processes involved in incorporating your company so that it is treated as a separate entity from you, the owner. This rule applies in many countries around the world. The formations can be made by you, attorneys, specialised companies or accountants. Many attorneys will contract this kind of work out to company formation agents, so it is worthwhile approaching these companies directly.
Paperwork must be filled in to give as much detail as possible about your corporation and it is a legal requirement. You will be asked to outline the main purpose of your business, the trading headquarters address and provide the name of your company. It is worthwhile doing your homework before you fill in the registration forms to ensure that you chosen name is not already taken.
Depending on the country you may also be required to submit details about the rules that have been set by the owner in relation to the internal running of the business. Directors, board members and secretaries must also be picked beforehand and the appropriate form filled out with these details also.
Once all the relevant paperwork has been completed fully, it must be returned with the registration fee to the correct office. It is possible nowadays to complete the forms electronically by accessing the relevant office’s computer. Many company formations agents have direct access to this electronic method, which may explain why they are able to process company registrations much quicker.
Before or as soon as your company is registered, you need to calculate your business start up costs, as you may wish to approach a bank to see about a business loan. Start up costs can mount up before you even start trading. These costs are items such as legal fees, logo designs, company formation agent fees and website design.
If you need to see about a loan, you need to sit down and work out a rough figure for your business start up costs. You should also take into account any running costs such as rental fees, staff wages and utility bills, as well as the costs already incurred before you start trading. Once this is all in order you can go to the bank manager with a detailed business plan.
You will be given a decision based on your plan and whether you have any previous knowledge of the trade (which is useful); another point that will be considered is whether you are able to make the loan repayments each month.
Company formations are a popular choice with many people starting up their own business. This is because the company may benefit from lower tax rates and can be protected by limited liability. Company formations may also mean that your business is taken more seriously and you may receive more clients than you would as just a partnership.