There are several ways to set up your own limited company. Go direct via Companies house, hire an accountant, or use a company formation agent. Here are the typical costs associated with each route:
As you can imagine, the more “middlemen” that are involved in the set-up process, the more you can expect to pay.
Having said that, contrary to popular belief, it is surprisingly inexpensive and easy to set up a company in the UK.
Here we look at your three main options:
a) Incorporate directly via Companies House (costs £12 or £40)
The registration fee to set up a company limited by shares is £12 if you use the Companies House web incorporation service.
The incorporation process can take up to 24 hours, but – in most cases – the process takes only a few hours.
You can pay by credit or debit card.
It costs £40 if you submit a paper application using Form IN01, although this is likely to be a slow process, as this Companies House statement suggests:
It’s taking much longer than usual to process paper documents sent to us by post. Use our online services where possible.
If you set up your company directly with Companies House, you can automatically register your company with HMRC for Corporation Tax, and as an employer. Otherwise, you need to do this separately if you opt for b) or c).
b) Use a formation agent (typical cost from £12 – £100)
Another route is to use an intermediary to set up a company on your behalf.
There are hundreds of formation services available online. From no-frills to more extravagant packages which even include a brass plate with your company name on it.
Most formation agents make their money by offering additional add-ons – such as business banking services – as it is hard to make money out of the formation service on its own.
You can also get discounts on accounting fees, a third-party registered address, and other administrative services.
You simply need to search if your proposed name is available, pay the fee, and everything should be taken care of on your behalf.
Our partner formations company is 1st Formations – you can set up a company for just £12.99 here.
c) Ask an accountant to form your company (variable cost)
Small business owners may prefer to set up a company via their accountants as this is a hassle-free process. For those unfamiliar with running a business, this makes a lot of sense.
For many, the idea of becoming a company director is fairly daunting. A specialist accountant can answer any questions relating to directors’ responsibilities, and to the formation itself.
If you’re considering issuing several classes of shares, have multiple shareholders, or need advice on how best to split your new company’s shares, then using an accountant is a prudent move – for obvious reasons.
In many cases, your accountant may even include the incorporation costs if you sign up for their monthly service.
Other accountants will apply a one-off charge rather than absorbing the costs into the standard fee.
Either way, your accountant should let you know upfront how much your company incorporation will cost.
Read this popular guide – do I need an accountant for my company? – for some more advice.
Visit our directory of contractor accountants for an initial list of service providers.
What about the ongoing costs of running a company?
Despite the preconceptions some prospective company directors may have, the ongoing overheads of running a company are very low from an ‘official’ point of view.
The only ongoing statutory cost is the £13 fee for submitting your Confirmation Statement.
The only additional expenses associated with administering the company itself are usually accountancy fees, and possibly some additional professional costs. These will vary according to the service provider you choose.
There are several steps you need to take when setting up a company – read 10 things you should know before forming a company.
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