Limited companies: How much does it cost to set one up?
16th Feb 2024 Down to Business
3 min read
Setting up a limited company is surprisingly easy, compared to the effort involved in starting your own business. Depending on which route you choose, you may be able to register a limited company within 24 hours and for less than your average takeaway.
There are three ways to set up a limited company
by either:
- Doing it yourself through Companies House.
- Using a third-party.
- Using an accountant.
Each one has different lead times and fees. This
article will look at your options so you can find the right one for you.
How much does it cost to register a company if I do it myself?
Companies
House has made it easy to register your limited company, either online or by
post.
For
private limited companies, you can register your business online for £12 if it:
- Has everything needed for its 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 or credit card, your company will be
registered within 24 hours.
For
public or private limited companies, you can register by post, which costs £40 and
has an 8-10-day turnaround. You’ll need to pay by cheque, made out to Companies
House.
Image source:
Image by StartupStockPhotos from Pixabay
What do I need to set up a limited company?
There
are many things you’ll need when setting up your limited company.
A company name
If
you’re planning on setting up a private limited company, you’ll need a registered
name.
There
are a couple of rules you’ll need to consider.
For
example, your name can’t be the same (or very similar) to one already
registered, it can’t be offensive, and it should usually 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. You can
find out more details here.
If
you want to trade under a name different from your registered company name, your
business name must not include ‘limited.’
Decide
to change your registration name? Companies House charges £8 to make the change
online, or £10 by post.
A memorandum of association
You’ll
need a memorandum of association if you’re registering by post. It will be
created automatically if you register online.
A
memorandum of association is a legal statement signed by initial shareholders
or guarantors, confirming they agree to form the company and includes your
company name, location and business type.
There
are online templates you can use. For the business type, you should select a standard
industrial classification (SIC) code from the list provided by Companies House.
You
can’t update the memorandum once the company has been registered.
A completed IN01 form
The
IN01 form, which
you can complete online or on paper, will ask for details, including three
pieces of information about yourself, your shareholders and directors.
This
can include:
- Town of birth
- Telephone number
- National insurance number
- Passport number
- Address or registered limited company address
If
you don’t have a company address yet, you can instead use a personal address as
HMRC and Companies House need a place to send legal correspondence.
You’ll
need to confirm your limited company complies with the terms and conditions of
the Companies Act.
Articles of association
This
is a legal document that outlines the rights and powers of company shareholders
and directors.
You
can use standard articles (also known as model articles), which is a default
set of articles established by the Companies Act 2006, or you can write your
own with the help of a legal adviser.
How much does it cost to set up a company with an accountant?
If
this is your first time setting up a company, having an accountant can boost
your confidence. They’ll help you complete the paperwork and also advise you on
the next steps.
Once
you’re registered with Companies House, you’ll have many statutory obligations.
Your
accountant can help you understand these, and ensure you submit all financial
accounts accurately and on time to remain compliant.
An
accountant may set up your limited company for free. If not, there will be a
one-off fee, which can vary depending on the extent of their involvement.
If
you’re looking for an accountant, 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,
which proves your company legally exists and shows your company name and date
of formation.
If
you register online, you’ll most likely be registered for corporation tax at
the same time.
If
you registered by post or through a third-party agent or software, you’ll need
to register for corporation tax separately within three months of starting your
business.
Are there other costs associated with running a limited company?
With
the initial registration done, the next thing you need to remember is your
annual confirmation statement.
You
need to file this every year to confirm your details at Companies House are up
to date. It costs £13 to file online and £40 by post.
Other
costs associated with running a limited company include rent, utilities, wages,
digital marketing, accountant fees and insurance. How much these cost depends
on you and your business.
If
you ever need to re-register your company, you can do this by post for a £20 fee.
Your
accountant can help you keep on top of all the costs of running a limited
company.
Need help with your financial accounts?
Unbiased
can quickly connect you with a qualified
accountant
who can help you with your accounts by making sure they are accurate and filed
on time.
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