Whether you’re self-employed or run a limited company, every business needs an official business address for general business correspondence.
In the case of a limited company, you also need to provide a registered office address, where the organisation receives its government notices, and a service address, where company officers receive their statutory documents.
You can provide a commercial or home office address for any of these, but which is better? Below, one of the UK’s leading company formation agents, Rapid Formations, explores the pros and cons of both options.
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Home office address: pros and cons
While using a home office address for your business is generally not advised, there are some advantages.
Pro: Convenience
Firstly, using your home office address is certainly convenient. You don’t have to travel anywhere to collect your company’s post, as it’s all delivered straight to your door. This is especially useful if you run your business from home.
Pro: Inexpensive
Secondly, it’s cheaper. It avoids paying for a commercial location, which can be costly, and in those early business stages, you probably want to be as frugal as possible.
Con: Lack of privacy
Using your home office address puts your privacy at risk. The registered office address and service address are publicly visible on the Companies House register, meaning anyone can see them at any time. This could invite unwanted visitors or unsolicited emails to your home.
Con: It might not be compliant
Although the registered office address can be residential, this is only an option if that address is in the same country where the company is incorporated. For instance, if you register a company in Scotland, the registered office must also be in Scotland.
Business and service addresses can be anywhere in the world, regardless of the country of incorporation. Before choosing an address, make sure it’s compliant first.
Con: It’s unprofessional
If you have a small business and are trying to build up your credibility, a home office address might put some people off. It’s not particularly professional or trustworthy, so potential clients or customers may not want to work with you as a result.
Commercial office address: pros and cons
Pro: More Prestigious
A commercial office address creates a far more prestigious business image. You’ll appear official and more reliable to outsiders, making them more likely to trust you and take you seriously.
Pro: Create the illusion of size
If you have a small business but want to appear as one of the bigger players, a commercial office address could be the answer. Early-stage companies are often expected to operate remotely, so this is a tactical way to appear more established.
Pro: Establish a work/life balance
Working at home can make distinguishing your business life from your personal life tricky. However, having a commercial office address where you can run your business day-to-day could make it easier to switch off and establish a healthy work/life balance.
Pro: Meet legal requirements
All registered office addresses must be ‘appropriate’, meaning a person must be available to acknowledge all incoming company mail. PO boxes are no longer permitted.
However, you could miss a delivery if your registered office address is at home. And what about when you go on holiday or relocate? There’s a risk that important documents will get missed. That’s why a commercial office address could be more suitable as a registered office or service address.
Con: It’s expensive
Naturally, a commercial space will cost more. Rent prices vary by location and size, but in London, for instance, you could pay as much as £105 per square foot in a prime zone.
Rent isn’t the only expense. A commercial office involves various additional overhead costs, such as utility bills, equipment and furniture, insurance, and maintenance. Meanwhile, a home office address won’t cost you anything extra.
Use a professional address service
There is no simple answer to which type of address is best. If you’re unsure, opting for a professional address service is a great compromise.
This third-party service allows you to use their professional office address as your company’s registered office or service address. When official mail arrives for you or the company, it’s normally forwarded digitally. That way, you never miss a thing or risk misplacing physical papers.
Professional address services keep your home address private, are considerably cheaper than leasing a commercial office, and are a great solution if you’re based outside the UK.
If you’d like to benefit from a professional address service, speak to the company formation experts at Rapid Formations. Their address services start at just £24 per year, with prestigious registered office locations in central London and Glasgow.
If you have yet to register your company, the privacy package protects your home address at the point of incorporation and includes a free London registered office address for 12 months. For more information, call the Rapid Formations support team on 080 7871 9990.
