Crossbone Systems

Crossbone systems was formed electronically with Companies House on the 21st of November, 2007. Using myself as the example, the dates on documents I have received indicate that it takes only two days for HM Revenue & Customs to receive notice that the company has been formed. Pretty impressive when it can take up to 4 weeks just to get a passport approved by other government departments.

Your first corporate letter from the Inland Revenue is very much a meet & greet affair. They want to get to know you a little before they start coming on strong and demanding ‘returns’ later in the year. They send you a charmingly named Corporation Tax New Company Details form. It basically requests the following:

1. Are you actually trading yet? (so will you be owing them tax any time soon)
2. Who is actually directing your company? (so Companies House don’t really tell them very much after all)
3. Can you be bothered to answer these questions (and more) yourself?

The last point is important, because this is the stage where you can nominate someone else to take care of all this tax-related drudge work for you. hoorah!

The good news is that they’re not demanding the form be returned for a fair while. It must be returned three months from the beginning of the first accounting period. In laymens terms, that means that once you take money on behalf of your company, you must return the Corporation Tax New Company Details form no more than two months after the end of that month. So if I make my first transaction at any point in December, I better make sure the Revenue have my completed form by the end of February or there are some serious fines to be had.

There are also decisions to be made in regard to the dates that the official corporate accounts will be prepared for. This is an area I’m not too familiar with so I’m going to do more research and write up more when I’m better informed.

Back to bank

I’m a little surprised as to how long it is taking to actually process my banking application forms. I’ll be chasing that down at the beginning of next week. Once my account is opened and ready for business, then with any luck I’ll be able to actually start taking my own advice and get hold of an accountant.

It turns out that banks love high-tech guys. They can’t wait to shower us in “free” services and add-on products designed to make our lives easier.

The poor market trader with his stacks of cash is totally obsolete from a banking point of view. He’s paying his fees daily and there’s nothing he can do about it. However, instead of mourning the loss of cheap market goods, I’m going to focus on the positive angles for Internet start-ups.

HSBC are currently offering 18 months of free business banking to start-ups. This means you can get your corporate account set up (and ready to start buying any essential hardware & software) without paying a penny. They offer an inclusive credit card, cheque processing, online & phone access and all the usual services you’d expect from personal banking, for nothing. The only condition is that you don’t want to process a lot of over-the-counter cash payments. Awesome.

I’ve gone ahead and set up an account with them, but MY GOD, the volume of paperwork that arrived this morning was unbelievable. It’s going to take me most of the weekend just to read it.

I’ve been spending a rather unhealthy amount of time worrying about registered addresses over the last few days. When starting a company, using your home address may not be practical or legal, depending upon your status as a tenant, zoning regulations and the exact nature of your business. Even if you can legally use your home address, you may not wish to broadcast it on your website and all your company stationary. Read the rest of this entry »

On Wednesday, I founded Crossbone Systems. Before founding the company, I considered blogging the experience but was worried that the whole thing might come across as a little nauseating.

Well, now I’ve already made my first costly mistake, I figure that maybe blogging it isn’t such a bad idea after all. I’m only human; there are bound to be plenty more mistakes to come that might be worth warning people about.

I was a big fan of the Bootstrapping Blog. Unfortunately, it deals with the generalities of starting your company, the hints and tips for staying solvent: not the hard fast, legally-required specifics to actually get things off the ground.

It’s easy to feel screwed founding your first company

The first thing I discovered is that before you even decide to found a company, they see you coming. You’re fresh meat, ready for the taking. A quick search shows the millions of pages all offering to take your money in exchange for a fast and easy founding.

I’d done a bit of research into company law, I vaguely knew what I was letting myself in for, and had some idea of what I needed. Even so, there are several issues that come to mind as you start to browse around those first search results:

1. How do I know that these companies are even legitimate?
2. How do I know that these compaines are any good?
3. Are the “special offers” they all offer really that special?
4. Is my decision, no matter how well or ill-informed, going to come back to bite me later?

I wrestled with those 4 questions for a while. I figured that Google were trustworthy enough that, in theory at least, the top results could only realistically be legitimate companies. So I did a bit of research, but in the end I just picked what looked like the best deal, feeling generally pretty intimidated about the whole affair. I went with the silver package by Companies Made Simple. This gives me:

• 3 hour online formation [not a feature - I did it outside office hours]
• Full Trading Limited Company [well, duh]
• Fast Track Banking [what, faster than walking into my bank? sadly not]
• Printed certificate [sounds useful]
• Registered Office - EC1 [sounds brilliant, in theory]

The complete package cost me £59.99. However, I also needed a company secretary and thought that using friends or family was a recipe for disaster - Companies House make the role of company secretary sound pretty intimidating. So I went with a “Nominee Secretary”. The “nominee company secretary” adds another £75 to the cost. At this point, I should have noticed the sales text states “Nominee secretaries do not usually have an active role or function in the actual business of the company.”

Now at the time, that all sounded very exciting indeed. Hindsight is a wonderful thing: to make use of the company secretary, I need to complete forms in the presence of a JP, Doctor or Solicitor. So that’ll be another expense.

When coupled with the fact that the registered address service only includes mail forwarding for mail that arrives from Companies House, and I’m seriously feeling screwed by the registered address package. If I want mail from the registered address sent to a real address, that’s another £15 per month!

Successfully founding a company without getting screwed

I’ll be writing a more detailed article in the future, but for now my basic advice would be this:

1. Before you’ve even registered your company, talk to an accountant. If you need to, ask them about their services for acting as your secretary or registered office address.
2. Start a company using the cheapest service you can find - your accountant may be able to recommend an online service.
3. Register the web domain names for your company as soon as possible.
4. Get a company bank account as soon as all company paperwork has arrived. HSBC let you have the first 18 months free.