Setting up a limited company may seem like a daunting task, but it’s actually easier than you might think. In fact, it can be done within 24 hours, and for just a few pounds. There are three options for setting up a limited company: do it yourself through Companies House, use a third-party agent, or enlist the help of an accountant. Each option has different fees and completion times, so it’s important to weigh your options and choose the best one for you. In this article, we’ll explore the costs of setting up a limited company and provide you with all the information you need to make an informed decision.
Cost to Register a Limited Company
Setting up a limited company may seem like a daunting task, but it doesn’t have to break the bank. The costs of setting up a limited company will vary depending on the method you choose. However, with careful planning and research, you can keep the costs to a minimum and ensure a smooth registration process.
Registering Online for Private Limited Companies
If you choose to register your private limited company online, the fee is just £12. This option is perfect for those who want a quick and convenient way to set up their company. To be eligible for this online registration, your company must meet certain criteria. First, it must have everything needed for setup, including being limited by shares and using standard articles of association. You’ll also need to fill out form IN01 and provide the necessary director and shareholder details, as well as your registered address. Once you pay the registration fee, your company will be registered within 24 hours.
Registering by Post for Public or Private Limited Companies
For those who prefer to register their company by post, Companies House offers options for both public and private limited companies. The cost for this service is slightly higher, with a fee of £40 for the 8-10-day turnaround and £100 for the same-day service. When registering by post, you’ll need to include a cheque made out to Companies House along with your application. It’s important to note that the same criteria mentioned earlier for online registration also apply to postal registration.
Requirements for Setting Up a Limited Company
Before you can register your limited company, there are a few requirements that must be met. These requirements ensure that your company is set up legally and operates within the guidelines set by Companies House.
Company Name
When choosing a company name, it’s important to ensure that it is unique and not already registered by another company. In addition, company names for private limited companies typically include the word “Limited” or “Ltd”. This word is a key indicator that the company is registered as a limited company. However, there are exceptions to this rule. For example, if your articles of association state that your company cannot pay its shareholders, you may not need to include “limited” in your name. Additionally, if you want to trade under a different name from your registered company name, your trading name should not include “limited.” If you ever need to change your registration name, be aware that Companies House charges a fee for this service.
Memorandum of Association
The Memorandum of Association is a legal document that includes a signed statement by all initial shareholders or guarantors. This document confirms their agreement to form the company and provides important details such as the company name, location, and business type. When registering online, the Memorandum of Association is automatically generated as part of the registration process. However, when registering by post, you’ll need to include this document separately. Templates for the Memorandum of Association can be found online, and it’s important to ensure that you select the appropriate Standard Industrial Classification (SIC) code for your business type.
Completed Form IN01
Form IN01 is a crucial part of the registration process, as it provides all the necessary personal and company details required by Companies House. This form asks for information about yourself, your shareholders, and your directors, including details such as birthplace, telephone number, National Insurance number, and passport number. If you don’t have a company address at the time of registration, you can use a personal address. It’s important to note that you’ll also need to state that your limited company complies with the terms and conditions of the Companies Act.
Articles of Association
The Articles of Association are a legal document that outlines the rights and powers of your company’s shareholders and directors. Companies House provides standard articles, also known as model articles, which are the default set of articles established by the Companies Act 2006. Alternatively, you have the option to write and upload your own articles with the assistance of a legal adviser. The Articles of Association are an important document that governs how your company operates, so it’s essential to ensure they accurately reflect your company’s values and objectives.
Costs of Setting Up a Company with an Accountant
Many entrepreneurs choose to enlist the help of an accountant when setting up a limited company. An accountant can provide valuable guidance and assistance throughout the registration process, ensuring that all paperwork is completed correctly and on time. The costs of setting up a company with an accountant can vary depending on the level of involvement required. In some cases, accountants may even set up your limited company for free if you sign up for their monthly services. If not, there will be a one-off fee for their services.
In addition to helping with the initial set-up, accountants can also assist with ongoing financial management and compliance. Once your company is registered, there are various statutory obligations that need to be fulfilled, such as submitting financial accounts and tax returns. An accountant can help you understand these obligations and ensure that you remain compliant.
What Happens after Company Registration
After successfully registering your limited company, there are a few important steps to take to ensure your company is fully operational and compliant.
Receiving a Certificate of Incorporation
Once your company is registered, you will receive a Certificate of Incorporation. This document serves as proof that your company legally exists and displays your company name and date of formation. This certificate is an essential document that will be required for various business activities, such as opening a business bank account or applying for business licenses and permits.
Registering for Corporation Tax
One of the advantages of registering your limited company online is that you will be automatically registered for Corporation Tax at the same time. However, if you registered by post or through a formation agent, you will need to separately register for Corporation Tax within three months of starting your business. Corporation Tax is the tax on the profits made by your limited company, and it’s important to ensure that you comply with all tax obligations.
Annual Confirmation Statement
As a limited company, you will be required to file an Annual Confirmation Statement with Companies House every year. This statement confirms that all the company details held by Companies House are accurate and up to date. The cost to file this statement is £13 online, and £40 by post. Filing this statement is a legal obligation, and failure to do so can result in penalties or even the dissolution of your company.
Other Costs Associated with Running a Limited Company
In addition to the initial registration and ongoing compliance costs, there are other expenses to consider when running a limited company. These costs will vary depending on the nature and size of your business, but some common expenses include:
- Rent and utilities for office or workspace
- Wages and salaries for employees
- General overhead expenses such as office supplies and equipment
- Digital marketing assets such as website development and online advertising
- Fees for accounting services to ensure accurate financial management and reporting
- Insurance to protect your company and its assets
It’s important to carefully consider these costs when budgeting for your limited company and to regularly review your expenses to ensure they are aligned with your business needs.
Conclusion
Setting up a limited company is a relatively straightforward process that can be done with minimal cost. By understanding the registration requirements, considering the assistance of an accountant, and taking care of ongoing compliance obligations, you can ensure the success and smooth operation of your limited company. While there are costs associated with running a limited company, careful budgeting and financial planning will help you navigate these expenses and set your company up for long-term success.
