Is Hiring A Company Secretary The Right Thing For Small Businesses?

Running a limited company is exciting and brings many benefits, but it also involves a lot of administrative work, which can be a burden.

There are many legal requirements for UK private companies, including filing annual accounts and confirmation statements and keeping company records up-to-date.

This can detract you from what really matters, like growing your business, spotting opportunities and establishing your brand.

However, as all these administrative tasks are necessary, you need someone to do them for you, and appointing a company secretary could be the solution.

But hiring a person to do the job can be costly, so it’s worth asking whether it’s the right decision for your business.

We look at all the considerations to take into account and other options to help you find the best solution for your company.

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Do You Need To Hire?

The cheapest and easiest option is to pass on the responsibilities of a corporate secretary to an existing staff member or another director, a shareholder or person with significant control (PSC) in the business.

For this to work, you have to have someone in the business that could take on the tasks. If you do have other directors or shareholders or PSC, they’ll have to be prepared to take on the responsibilities.

If they do, great, but if not, you might have to look to your employees. But your current staff’s workload might not allow them to take on more work, or they might not be qualified.

A company secretary is a company officer, which means they are part of the management team. As they are also responsible to make sure your business fulfils its legal requirements and adheres to any regulations your company comes under, certain qualifications are necessary.

Most small UK businesses are so-called micro businesses that have less than 10 employees or don’t have any employees at all. According to government statistics, in 2023 of the 5.6 million private companies, 4.1 million didn’t have any staff.

So you might not have anyone to whom you could pass on the responsibilities to free up your time. This means you have to hire someone.

The Pros And Cons Of Hiring A Company Secretary

Getting a qualified person on board to take on the responsibilities of a corporate secretary has several benefits.

As part of your company, they have a vested interest in making sure all the legal requirements are fulfilled. When you pass on such important tasks, you want to be able to trust that they are done properly.

That’s what you get when you employ someone, so this is a great benefit. And you might be able to pass on other tasks too so you can really focus on growing the business.

Especially if you’re running your business alone, having a second brain involved in the business can be beneficial. They might come up with ideas for your company that you didn’t see.

However, these advantages also come with a downside, and that’s costs. As an employer you don’t just have to pay them their salary, you also have to pay NIC contributions for employers, statutory sick and holiday pay.

Salaries for company secretaries vary, depending on the size of the company and sector. And their experience will also play a part. The more experience they have, the more expensive they will be.

To reduce costs, you could hire someone to fulfil the role on a contractor basis. This means you don’t employ them, but have a contract in place that outlines the tasks that they will perform for you and at what rate.

While this will bring down the costs, you’ll lose the benefit of having someone that has a vested interest in your business. They’ll also be working for other clients, so are unlikely to put in the same amount of effort as an employee would.

That doesn’t mean that it’s a bad idea, just something to consider before appointing a company secretary that works on a freelance basis.

Use A Company Offering This Service

If hiring a corporate secretary is out of the question due to budget constraints, and you aren’t sure about a freelancer, you have another option.

You don’t have to engage an individual to fill the role, as you can buy the services of a company offering company secretarial packages.

There are many companies out there that offer administrative services to businesses who can’t afford to hire staff to cover these responsibilities. It’s like a firm of accountants or solicitors.

You get the experience and expertise but without having to employ them. This can give you peace of mind while also saving you money.

The advantage over a contractor is that with such a company you can be sure that their staff is experienced and knolwedgable. At least, that’s true if you go for a reputable company who offers this service.

We Recommend 1st Formations’ Full Company Secretary Service

With so many companies out there offering this service, it’s difficult to know which one to choose. We formed our company with 1st Formations and have been using their services ever since.

They offer a Full Company Secretary Service for only £149.99 +VAT per year, which is quite a good price. For this you’ll get everything a small business needs:

• Your own dedicated account manager – this will be someone with experience as a secretarial professional and who will be at hand whenever you have a question or need advice – probably the most valuable part of the service
• Up to 15 changes per year included – when things change, like share allocations, directors, etc. you have to inform Companies House. As part of this service 1st Formations will do this for you
• File your annual confirmation statement – it’s a legal requirement and costs £34 if you do it with Companies House directly. If you have this package you don’t need to worry about it, as it will be done by your account manager, including paying the fee
• Prepare and maintain your company registers – as a limited company you are legally obliged to keep your company registers up-to-date, which they will do for you
• Badge for your website to prove compliance – their trust badge allows you to tell your clients or customers that you take compliance seriously. You can display the badge on your website
• Guidance note written by a solicitor – they will provide you with guidance by a legal professional about key processes and topics around running a company in the UK – with so many regulations, this is very useful to ensure you know what your responsibilities are
• Service for dormant companies – if your company is dormant, 1st Formations will submit your dormant company accounts to Companies House on your behalf, and you will get a template letter to send to HMRC to inform them that your company is dormant for tax purposes

Most small businesses won’t need any more than what’s on offer in this Company Secretary Service, but it can free up vital time and headspace for you to focus on more important things, like growing your business.

In our opinion, the dedicated account manager is the biggest asset of this service, because it gives you access to an experienced professional who can answer any questions or concerns you might have.

And even if your appointed account manager happens to be off, there will always be someone else with a similar level of experience to support you with anything.

That’s the advantage of opting for a company rather than a freelance corporate secretary, apart from the price.

Appointing A Company Secretary The Way That Works For You

There is no doubt that at some point you’ll want someone to take on the important administrative tasks that a limited company is required to carry out by law.

For some small businesses, hiring a company secretary or a freelance corporate secretary will be the right option.

But for many, the expense involved will make this option challenging if not impossible. The good news is that this doesn’t mean you have to keep doing it all yourself.

Many companies, like 1st Formations, offer secretarial services to small businesses at a low cost. So you can have the peace of mind that your business is compliant while keeping costs from spiralling out of control.

If you want more tips and advice, Business4Beginners has you covered.

Recommended Company Secretary Service:

Prefer to outsource your company secretary so that it’s one less thing to worry about?

Our top-rated company formation agent, 1st Formations, offer a full company secretary service (even if you didn’t use them to form your company).

It includes a named secretary at Companies House, a dedicated account manager, and maintenance of your statutory registers – including your annual confirmation statement.

Click here to visit their site