Setting up a limited company: The price breakdown

Setting up a private limited company is surprisingly fast and straightforward, in comparison to the effort required to start your business venture. In fact, depending on the chosen method, you can register a limited company within a mere 24 hours - and at a lower cost than an average take-out meal.

There are three ways to establish a limited company. You can either undertake the procedure independently through Companies House, or you can enlist the assistance of a third-party agent or accountant. Each option comes with its own timeframe and fees, so continue reading to discover the best approach for you.

What is the cost of registering a company if I choose to handle it myself?

Companies House has streamlined the registration process for limited companies, allowing for online or postal registration.

For private limited companies, the online registration fee stands at just £12, on the condition that:

• All the necessary requirements for setup are fulfilled
• The company will be limited by shares
• The standard articles of association will be utilized

To proceed, you must complete form IN01, which demands details concerning directors, shareholders, and the registered address. Upon payment of the registration fee via debit card, credit card, or PayPal, your company will be officially registered within 24 hours.

In the case of public or private limited companies, registration via post is an option. The postal registration fee amounts to £40 for an 8-10-day processing time or £100 for same-day service. Payment can be made by cheque, payable to Companies House.

What requirements must be fulfilled to establish a limited company?

Multiple prerequisites must be met for the establishment of a limited company.

If you are initiating a private limited company, a registered name is mandatory. However, some key guidelines must be followed: the name cannot be identical to an already registered entity, it must not be offensive, and traditionally, it should include the term "limited."

However, certain exceptions exist where the term "limited" need not be included. For instance, this is valid if the articles of association establish that the shareholders of the company cannot be remunerated. Furthermore, if you wish to conduct business under a name distinct from your registered company name, it is essential that the trading name does not incorporate the term "limited."

Should you ever decide to alter your registered name, Companies House imposes a fee of £8 for online changes or £10 for postal requests.

A Memorandum of Association

This document is solely necessary for postal registrations. When registering online, it is automatically generated as part of the registration process.

The Memorandum of Association serves as a legal statement signed by initial shareholders or guarantors, indicating their agreement to form the company. It will include pertinent information such as the new limited company's name, location, and business type. Online templates are available to guide you through this process, and for selecting the business type, you will need to choose a Standard Industrial Classification (SIC) code from the options provided by Companies House.

It is crucial to note that the memorandum cannot be modified once the company has been registered.

Form IN01, whether completed online or on paper, asks for various details regarding yourself, shareholders, and directors. This information may include:

• Birthplace
• Phone number
• National Insurance number
• Passport number
• Address or registered limited company address

If you do not yet possess a company address, there is no need to worry. A personal address can be used instead. HMRC and Companies House simply require a mailing address for legal correspondence purposes.

Additionally, you must confirm that your limited company adheres to the terms and conditions outlined in the Companies Act.

This document is a legal publication that outlines the privileges and capabilities of the shareholders and directors of a company. You have the option to utilize standard articles, also known as model articles, which are the default set of articles established by the Companies Act 2006. Alternatively, you can create and upload your own articles with the assistance of a legal advisor.

What is the cost of establishing a company with the support of an accountant?

If you are new to this process, having an accountant by your side can provide you with a sense of confidence. They will assist you in completing all the necessary paperwork and can also offer guidance on the next steps to take.

Once you have registered with Companies House, you will have various legal obligations. Your accountant can help you understand these responsibilities and ensure that you accurately submit all your financial accounts on time to remain compliant.

In some cases, an accountant may set up your limited company free of charge, particularly if you subscribe to their monthly services. Otherwise, there will be a one-time fee which may vary depending on the level of involvement you desire. If you are considering enlisting the services of an accountant, you can find the general cost of an accountant here.

What occurs after the successful registration of my limited company?

Upon the successful registration of your company, you will receive a Certificate of Incorporation. This document serves as evidence that your company legally exists and includes your company name and the date of its formation.

By registering online, you will also be automatically registered for Corporation Tax. However, if you registered by post or through a formation agent, you will need to separately register for Corporation Tax within three months of commencing your business.

What are the additional expenses associated with operating a limited company?

With the initial registration completed, the next important matter to remember is your annual Confirmation Statement. This statement must be filed each year to confirm that your company details at Companies House are up to date. The filing fee is £13 when done online and £40 when done by post.

In addition to these fees, the costs associated with running a limited company include general expenses such as rent, utilities, wages, digital marketing assets, accountant fees, insurance, and more. The total amount of these costs will depend on your specific business and its needs.

If there is ever a need to re-register your company, you can do so by post for a fee of £20 or by utilizing a same-day service for a fee of £50.

Your accountant will assist you in staying on top of all the immediate and ongoing costs associated with operating a limited company.

If you found this article helpful, you may also find our article on how to acquire a business partner informative.

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