Setting up a Limited Company is undoubtedly a crucial step in establishing your business. The process may seem daunting, but fear not! This comprehensive guide will walk you through the costs involved in setting up a limited company, as well as the necessary steps and considerations. Whether you choose to register yourself through Companies House, enlist the help of a third-party agent, or seek guidance from an accountant, we’ve got you covered. So, let’s get started on your journey to setting up a limited company efficiently and cost-effectively.
Ways to Set Up a Limited Company
When it comes to setting up a limited company, there are three options available to you. You can choose to do it yourself, use a third-party agent, or hire an accountant. Each option has its own advantages and considerations, so let’s explore them in more detail.
Do it Yourself
Setting up a limited company yourself might seem daunting, but it’s actually a relatively straightforward process. Companies House has made it simple to register your limited company online or by post. If you choose to register online, the cost is only £50. However, there are some criteria that your company must meet for this low-cost option. It must have everything needed for setup, be limited by shares, and use standard articles of association. You’ll need to fill out form IN01, which asks for director and shareholder details, as well as your registered address. After paying the registration fee, your company will be registered within 24 hours.
If you prefer to register by post, the cost is slightly higher. For private limited companies, it costs £71 for the 8-10-day turnaround. You’ll need to pay by cheque made out to Companies House.
Use a Third Party Agent
Another option is to use a third-party agent to set up your limited company. These agents specialize in assisting with company registrations and can handle the process on your behalf. They often provide additional services such as registered office addresses and ongoing support. The cost of using a third-party agent can vary depending on the level of service you require and the agent you choose. It’s worth considering this option if you’re looking for professional assistance and additional support throughout the registration process.
Use an Accountant
If you’re looking for a more hands-on approach to setting up your limited company, hiring an accountant might be the best choice for you. An accountant can guide you through the entire process, ensuring that all the necessary paperwork is completed correctly and on time. They can also provide valuable advice on financial matters and help you understand your statutory obligations as a company director. The cost of setting up a company with an accountant can vary depending on the level of service you require and the accountant’s fees. Some accountants may even set up your limited company for free if you sign up for their monthly services.
Requirements for Setting Up a Limited Company
Setting up a limited company involves meeting certain requirements and providing specific documents. Here are the main requirements to keep in mind:
Company Name
Choosing a company name is an important first step in setting up a limited company. Your company name must be unique and cannot be the same as one that is already registered. It should also comply with certain guidelines, such as not being offensive and typically including the word “limited.”
Memorandum of Association
The Memorandum of Association is a legal statement signed by all initial shareholders or guarantors, indicating their agreement to form the company. This document includes your company name, location, and business type. If you register your company online, the Memorandum of Association will be automatically generated for you. If you register by post, you’ll need to include a completed Memorandum of Association with your application.
Form IN01
Form IN01 is the registration form that you need to complete when setting up a limited company. It collects information about yourself, your shareholders, and directors, including details like town of birth, telephone number, national insurance number, and address. If you don’t have a company address yet, you can use a personal address. It’s important to note that you’ll need to declare compliance with the terms and conditions of the Companies Act when completing this form.
Articles of Association
The Articles of Association are a set of written rules that outline the rights and powers of the company shareholders and directors. You have the option to use standard articles, which are already established by the Companies Act 2006, or create your own customized articles with the help of a legal adviser. These articles should be included with your registration application.
After Registering Your Limited Company
Once your limited company is successfully registered, there are a few important steps to take in order to ensure that you comply with legal requirements and set your business up for success.
Certificate of Incorporation
After the registration process is complete, you will receive a Certificate of Incorporation. This document serves as proof that your company legally exists and includes important details such as your company name and date of formation. It’s an essential document that you may need to keep in a safe place.
Registering for Corporation Tax
Registering for Corporation Tax is an important step for any limited company. If you registered your company online, 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 register for Corporation Tax separately within three months of starting your business. This involves notifying HM Revenue & Customs (HMRC) and providing them with relevant financial information.
Other Costs Associated with Running a Limited Company
In addition to the initial registration fees, there are also ongoing costs associated with running a limited company. These costs can vary depending on your business’s specific needs and requirements. Here are a few examples of common costs:
Annual Confirmation Statement
Every year, you will need to file an Annual Confirmation Statement with Companies House. This statement confirms that your company details are up to date and accurate. The cost to file the Annual Confirmation Statement is £34 online or £62 by post. It’s important to ensure that you file this statement on time to remain compliant with Companies House requirements.
General Expenses
Running a limited company comes with various general expenses such as rent, utilities, wages, digital marketing assets, insurance, and more. The cost of these expenses will depend on the nature of your business and its specific needs. It’s important to budget and plan for these costs to ensure the financial stability and success of your company.
Accounting Advice and Services
Managing the financial aspects of your limited company can be complex and time-consuming. That’s why many business owners choose to hire an accountant to assist them with their financial affairs. Accountants can provide a range of valuable services, including bookkeeping, tax advice, payroll management, and more. Finding the right accountant can make a significant difference in the success and financial stability of your limited company.
Finding an Accountant
When searching for an accountant, it’s important to consider their qualifications, experience, and reputation. Look for accountants who specialize in working with small businesses and have a good understanding of the specific challenges and regulations that come with running a limited company. You can ask for recommendations from other business owners or use online directories to find accountants in your area. It’s also a good idea to schedule a consultation with potential accountants to discuss your needs and ensure that you’re a good fit for each other.
