Before now, forming a limited company—either from scratch or from an existing sole proprietorship—used to be very cumbersome, as the whole process involved a lot of paperwork and protocol.
However, the Internet now abounds with company formation service providers, which assist with forming a company and make the whole process a lot easier. So, you can now form your own company without leaving the comfort of your home or office.
Although the idea of forming your company online sounds cool, it comes with a number of pitfalls. So, if you’re looking to form your company through the online approach, here are four common mistakes you must avoid.
1. Choosing the wrong service provider
A simple Google search for company formation service providers in your state or country will throw several options at your face. To avoid making the wrong choice, compare as many providers are possible in terms of service quality, turnaround speed, customer support, pricing, and reputation.
While it’s tempting to go with the cheapest option, this can send you into the wrong hands. So, rather than make pricing your priority, choose based on other more important factors.
2. Incorporating in another state or country
Each company formation service provider caters to a specific geographical location, such as a specific country or just a state within a country. So, you need to be careful when choosing a provider, as most providers’ company names and website addresses don’t reflect their target markets.
Before you proceed to register with any company formation service provider, double-check on their website to see if they cater to clients within your state or country. Be sure to incorporate where your business has a physical presence, or else you could face difficulties or get penalized for operating out-of-state.
3. Being careless with details
Before submitting your company formation application online, you must be very careful, so you won’t make silly typographical or spelling mistakes that will take time to rectify. So, be sure to double-check that the company name is correct and that you’ve added “Ltd” or “Inc.” to it—depending on what obtains in your country.
In addition, double-check the spelling of your name and those of other directors or shareholders. Also, confirm that your company address and other details about your company are correctly entered. Several applications are rejected due to mistakes that could have been avoided through extra caution.
- Not having the necessary business licenses
Due to the ease that comes with forming a company online, it could be tempting to go ahead without necessarily having the required licenses and documents. But this can hurt your business in the long term.
So, before going ahead to complete your company formation form online, be sure to have all business licenses and permits required in your state or country. Most business licenses can be obtained at very cheap prices that are insignificant when compared with the heavy fines imposed on those operating without required licenses.
By avoiding these four mistakes, you’ll be able to form a company online without any issues or regrets.