If you are thinking about setting up a limited company, you might be surprised to find out that you can incorporate a new company for under £20. Here, we look at how incorporation costs vary according to the formations service you choose, together with additional costs you may incur.
Although many people think that forming a company must be an expensive and arduous process, the reality couldn’t be further from the truth. In fact, although running a company does involve more administration, and directors have more statutory responsibilities than the self employed, running a company is neither an expensive nor a burdensome task for most.
Set up a company – direct with Companies House
The cheapest way to form a company is to do so directly with Companies House, the registrar of companies in the UK. The current cost of incorporating directly is a mere £15 via WebFiling (£13 via Software Filing, £40 via post). You can find out more here. However, this is an effective but no-frills service, so if you need extra support (and perhaps additional services), you may consider using a formations agent, or talking to your accountant.
Set up a company – using an intermediary
Alternatively, you can choose to use an intermediary to form the company on your behalf – a formations agent. There are hundreds of firms offering this service in the UK charging anywhere from around £50 to £100 or more.
You can use Company Bug’s in-house company formation service, which provides online assistance, and back-up, for a flat fee of £75 + VAT.
Sometimes a formations agent will form the company at a loss, if you sign up for a bank account or other service. In our view, it is always best to set up your company as a one-off task, and consider which bank is best for your business separately.
Other professionals such as accountants will often take care of the formations process on your behalf, even for ‘free’ in some cases, if you sign up for their accountancy services.
Running a company – ongoing costs
Alongside the minimal initial costs of incorporating, there are other events which may incur a fee.
Every company has to submit an Annual Return (AR01) on the anniversary of their incorporation. This provides Companies House with a snapshot of each company on that date. It includes details of the company, its directors, and shareholders. The costs for an electronic submission is £13, and by means of discouraging postal submissions, a paper return costs £40. You can find out more about Annual Returns here.
If you want to change your company name, Companies House charges £30 (software / WebFiling), or £50 (paper form).
For a complete list of all Companies House charges, for less common events, click here.
In addition to these event-driving costs, all companies will have additional variable administration costs, including accountancy fees, and any penalties which may apply for late submission of accounts or forms.
|ClearSky Accounting - Limited company specialists|