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

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

Setting up a limited company is called an incorporation, and is a process completed through Companies House. The submission fee for the standard online incorporation service is £12, and an accountant will typically charge from £100 - £500 depending on the complexity and whether you intend to continue to use them for other services.

What is a Limited Company?

Creating a limited company means that your business is carried on by a separate legal entity than yourself personally. Limited companies can be run by just one person, or may be owned by multiple shareholders.

This structure means that your liability for the business debt is limited to your stake in the company, depending on any personal guarantees you make.

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How Do I Set Up a Limited Company?

There are a few ways you can choose to incorporate your business. Which is right for you will depend on how comfortable you are managing your own incorporation, how complicated the company structure is, and how much time you have available.

  1. You can incorporate online using the Companies House service. Standard online incorporation costs £12. If you incorporate using the paper application form (called an IN01), this costs £40. If you request a one-day turnaround for a paper application, the cost increases to £100.
  2. A formation agent can manage the incorporation for you. They usually also offer other services, such as registering your new business with other organisations, or creating a separate registered address for you.
  3. An accountant can set up your limited company. They can provide advice about the different aspects of incorporation, and help with preparing the documents involved.

How Long Does It Take to Set Up a Limited Company?

The incorporation process itself takes 24-hours to be processed if you submit your documents online.

An accountant will usually complete a new limited company incorporation within 2-3 days, depending on whether you need tailored advice about the company structure beforehand.

What do I Need to Incorporate my Company?

If you are using an accountant, they will manage much of the paperwork for you. If you decide to register your limited company yourself, you will need to have the documents ready to file.

Companies House does provide template documents with standard terms. However, it is essential to review these and ensure the conditions under which your company is incorporated are relevant to your business.

Documents you need include:

  • Memorandum of Association
  • Share certificates
  • Articles of Association
  • Statutory registers

How Much Does It Cost to Set up a Limited Company?

The application cost with Companies House depends on whether you register online, or send in a paper form. Requesting an expedited service costs more:

  • Standard online application £12
  • Paper application £40
  • Same-day paper application £100

If you appoint an accountant to carry out the incorporation, this will cost on average between £100 to £500.

There are lots of factors that determine the costs, such as:

  • Whether you will be using your accountant for ongoing services, such as filing statutory accounts.
  • How complicated your shareholder structure is.
  • Whether you need professional advice before deciding to incorporate.
  • If you need to use your accountant's premises as your registered address.

Find out more about small business accounting costs and the different factors involved in setting up a limited company below.

Why Choose an Accountant to Set Up a Limited Company?

Many business owners choose to appoint an accountant to register their limited company. This is because they have the benefit of independent advice about the best company structure for their requirements, and can review whether the filing requirements and associated costs are worthwhile when balanced against the advantages of this trading status.

Accountants can help with:

  • What type of company to incorporate.
  • Whether you should plan for audit requirements depending on the size of your business.
  • How to structure your share ownerships.
  • Ensuring all the correct documents have been filed.
  • Understanding administrative requirements and ongoing filing obligations.
  • Setting up other registrations - such as PAYE and VAT.

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What are the Benefits of a Limited Company?

One of the main benefits of choosing to trade as a limited company is the limitation of personal liabilities. A limited company is a legal entity in itself, which means that issues such as debt collections will apply to the company rather than directly to the individuals running it.

Other advantages include:

  • Being able to structure salaries and dividends through the company.
  • Providing employee benefits such as pension schemes.
  • Protecting your business name from being copied (no two companies can be incorporated with the same name).
  • The credibility of having an incorporated business.
  • Planning for tax efficiencies.
  • Being able to broaden the potential for share ownerships and investments.
  • Easier access to lending and financial support.

What are the Disadvantages of a Limited Company?

The principal disadvantage is that, once your company has been incorporated, you are obliged to keep up with the Companies House filing requirements. These do incur additional costs, which your accountant can advise you of.

Disadvantages of choosing to trade as a limited company include:

  • The time and cost of accounting obligations.
  • It is not an option for Directors who have been disqualified, or people who have undischarged bankruptcies.
  • Limitations on access to company funds.
  • Record-keeping requirements - such as minuting meetings and recording shareholder decisions.
  • Maintaining your company registers; such as the annual Confirmation Statement confirming your shareholder ownerships.
  • Easier access to lending and financial support.

Find out more about financial advisor costs and wealth manager costs and how financial advisors and wealth managers may be able to advise on your company setup.

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Frequently Asked Questions

Can I Set Up a Limited Company Myself?

Yes, you can! There is no mandatory requirement to use an accountant although if you are uncertain of any aspect of registering our limited company, it is wise to seek professional advice.

You can incorporate a new limited company online through the Companies House portal. This costs £12, and your new business will usually show on the company register within one day.

If you choose to incorporate yourself, make sure to save copies of all of your incorporation documents, as you will need to keep a record of these on file at your registered premises.

Your trading address does not need to be the same as your registered address. Many businesses choose to use an office address for formal company correspondence, often the address of their accountancy service.

What Other Types of Company are there?

There are lots of different company structures to choose from, all with their pros and cons. As well as a limited company, some of the other forms that businesses can trade under include:

  • Sole traders
  • Partnerships
  • Public Limited Companies
  • Limited Liability Companies
  • Community Interest Companies

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