The decision of whether to buy a ready made company or form a brand new one may be influenced by a number of factors. In each individual situation the persons involved will weigh up the various factors and decide on the one pro and cons of each.
The following table highlights the main differences between ready made and new UK limited companies. The list is not exhaustive as their may be special factors outside the norm will may compel the purchase of one type of company as opposed to the other.
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Ready Made Company
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Incorporating a New UK Limited Company
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| Price of each type |
Ready made companies are generally more costly. Their price can be anywhere from £35 to £500,000 depending on where they were incorporated and what value is placed on the name of the company. |
A new UK limited company is frequently cheaper. Prices begin at around £20 and extend up £300 depending on which particular add-ons are included in the company formation package. |
| Speed of acquiring the company |
Changing ownership of an off-the-shelf company can take minutes if both parties are physically present. Changing ownership of the bank account can take some weeks. |
New ltd companies can be set-up in under three hours, sometimes less. If officers are appointed at the time of the incorporation, then no additional time is required to appoint directors and secretaries. Appointments made after registration can in rare cases be subject to unforeseen delays at Companies House. |
| Bank account included |
Readymade companies can have an established bank account attached to them. |
A new UK company can not have bank accounts opened at the moment of their incorporation. |
| VAT registration included |
A ready made company can come already registered for VAT provided they have traded at some stage in their past. |
VAT registration must take place after the business has been set-up. |
| Risk to purchasers |
Generally there is a greater degree of risk with off-the-shelf entities, particularly with those businesses which have traded in the past. |
Setting up new UK limited company will carry very little or no risk. The newly incorporated business, by definition, would not have traded previously and therefore not be subject to the actions of any former officers |
| Trading history |
Some but not all ready made companies may come with a trading history. |
None would have a trading history. |
| Date of incorporation |
The date of incorporation could be several days or several years in the past. It would depend on the individual company in question. |
The date of incorporation would be the same as when the purchaser completed the formation. |
| Change the name of the company |
A readymade company frequently have their names changed before or following transfer to their new owners. |
A company name change occurs less often as the appropriate one can be selected before incorporation. |
