How much does it cost to set up a limited company?

Setting up a limited company is surprisingly quick and easy, compared to the effort involved in starting your business itself. In fact, depending on which route you go, you can register a limited company within 24 hours – and for less cost than an average take-away dinner.

There are three ways to set up a limited company. You can either do it yourself through Companies House, or you can use a third party agent or accountant. Each has different lead times and fees, so read on to find the best option for you.

How much does it cost to register a company if I do it myself?

Companies House has made it simple to register your limited company, either online or by post.

For private limited companies, you can register your business online for just £50, provided that it:

• Has everything needed for setup
• Will be limited by shares
• Will use standard articles of association

You’ll need to fill in form IN01, which asks for director and shareholder details and your registered address. After paying the registration fee by debit card, credit card or PayPal, your company will then be registered within 24 hours.

For public or private limited companies, you can register by post. This costs £71 for the 8-10-day turnaround, or £100 for the same-day service. You’ll need to pay by cheque, made out to Companies House.

What do I need to set up a limited company?

There’s a number of things you’ll need when setting up your limited company.

1. A company name

If you’re setting up a private limited company, you’ll need a registered name. There are a couple of ground rules: your name can’t be the same as one already registered, it can’t be offensive, and it should typically include the word ‘limited’.

There are some instances where you don’t have to include ‘limited’, such as if your articles of association say your company can’t pay its shareholders. Also, if you want to trade under a name different from your registered company name (which you can do), your trading name must not include ‘limited’.

If, at any point, you want to change your registration name, Companies House charges a £20 fee to make the change online, or £30 by post.

2. A Memorandum of Association

You’ll only need this document if you’re registering by post. If you’re registering online, it will be created automatically for you, as part of your registration.

The Memorandum of Association is a legal statement signed by all initial shareholders or guarantors, showing that they agree to form the company. It will include your new limited company name, location and business type. There are online templates available to help you with this and, for the business type, you’ll select a Standard Industrial Classification (SIC) code from the list provided by Companies House.

It’s important to note that you can’t update the memorandum once the company has been registered.

3. A completed form IN01

The form IN01, which you can complete online or on paper, will ask for details including at least three pieces of information about yourself, your shareholders and directors. This information can include:

• Town of birth
• Telephone number
• National Insurance number
• Passport number
• Address / registered limited company address

If you don’t have a company address yet, don’t worry. You can use a personal address. HMRC and Companies House just need a place to send legal correspondence to.

You’ll also need to state that your limited company complies with the terms and conditions of the Companies Act.

4. Articles of Association

This is a legal document of written rules that outlines the rights and powers of the company shareholders and directors.

You can opt to use standard articles (also known as model articles), which is the default set of articles established by the Companies Act 2006.

Alternatively, you can write and upload your own with the help of a legal adviser.

How much does it cost to set up a company if I do it with an accountant?

If you’re new to all this, having an accountant by your side can give you a boost of confidence. They’ll help you complete all the paperwork – but they’ll also be able to advise you on next steps.

Now that you’re registered with Companies House, you have various statutory obligations. Your accountant can help you understand what these are, and ensure you submit all your financial accounts accurately and on time to remain compliant.

An accountant may set up your limited company for free, especially if you sign up to their monthly services. If not, there will be a one-off fee, which can vary depending on how involved you want them to be. If you’re looking to bring an accountant on board, here’s the general cost of an accountant.

What happens after my limited company is registered?

Once your company is successfully registered, you’ll receive a Certificate of Incorporation. This proves your company legally exists and shows your company name and date of formation.

There’s an added bonus to registering online – you’ll be registered for Corporation Tax at the same time. However, if you registered by post or through a formation agent, you’ll need to register for Corporation Tax separately within three months of starting the business.

What are the other costs associated with running a limited company?

With the initial registration out of the way, the next thing you need to remember is your annual Confirmation Statement. You need to file this every year, confirming that your company details at Companies House are up to date. The cost to file is £34 online and £62 by post.

Other than these fees, the costs associated with running a limited company include the general rent, utilities, wages, digital marketing assets, accountant fees, insurance, etc. How much this all costs depends on you and your business.

And if, for any reason, you ever need to re-register your company, you can do this by post for a fee of £71 Your accountant will help you keep on top of all the immediate and ongoing costs of running a limited company.

Get expert financial advice

Setting up a limited company involves some initial costs and considerations, but with the right information and resources, the process can be straightforward and cost-effective.

Whether you choose to register yourself or with the help of an accountant, understanding the requirements and associated expenses will help you make informed decisions and ensure your business starts on a solid foundation.

Let Unbiased match you with a financial adviser for expert financial advice to help you streamline the process of setting up and running your limited company.

If you found this article helpful, you might also find our article on how to buy out a business partner informative, too.