The cost of setting up a limited company

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Introduction -what is the cost of setting up a limited company in the UK? 

As a UK contractor, are you looking at starting a limited company for future contracting? If this is so, how much does it cost to set up a limited company (UK)? When considering the cost of setting up a limited company, there’s several choices. You can choose the contractor setup fee and set up limited company cost you most prefer. However, when starting the process to create a limited company for the first time, what’s the cost of setting up a company for contracting? When you start the setting up a contracting business process, it’ll help to have some guidelines on how to set up a limited company (UK) and an idea of the initial setting up a limited company cost.

Our guide on setting up a UK limited company covers this process in more detail. Indeed, it shows how to undertake contractor limited company formation for your new business. When you’re about to start a limited company contract, you’ll need to research the steps to set up a UK limited company. Therefore, as part of your contractor formation, you may move from:

  • An employment-type role.
  • Work via an umbrella company.
  • Work as a sole trader and you decide to incorporate your business.

One key aspect in the limited company set up process is the contractor cost of setting up a limited company (UK). Therefore, when looking at how much does it cost to register a company in the UK, we’ll research the choices available for your contractor company formation costs. When we research setting up a new company for UK contracting, there’s in fact several ways you can register a limited company in the UK. Furthermore, these different ways for a limited company setup (UK) also have different levels of limited company set up costs associated with them.

Initial thoughts 

Common questions

When you open a ltd company (UK) for the first time, you may have some questions on the set up a limited company cost. Such questions will cover how much does it cost to start a limited company and how the process works. Therefore, some examples of such questions on the cost of contractor setup will include:

  • How can I open a company in UK?
  • How do I set up a limited company?
  • Where can you open a company?
  • How do you set up a ltd company?
  • How long does it take to set up a limited company UK?
  • What’s the fee to set up limited company (UK)?
  • How much to register a limited company in the UK?
  • How to establish a company in UK?
  • What do you need to set up a company?
  • How to open a company in the UK?
  • How to set up as a limited company?
  • When can you set up your own company?
  • How to set up a company in the UK?
  • How to start a company in UK?

In this guide, we’ll look at the cost of registering a company (UK). What’s more, we’ll find out how to create a limited company and how much does it cost to set up a ltd company.

Setting up a limited company cost -three choices when you create limited company

Are you ready to go ahead with your limited company setup and undergo private limited company formation? In this guide, we’ll research the different processes available when starting up a limited company and the associated company set-up costs.

  • The first choice when you set up a UK limited company is to form a company yourself. You can apply directly with Companies House for new company registration.
  • Your second choice when setting up a UK limited company is appointing an accountant. When doing this, you may prefer a limited company contractor specialist to look after you. Once you’ve an accountant in place, you can ask them to form a limited company.
  • As a third choice when starting up a limited company is to use a formation agent for private limited company setup.

Some more initial questions may arise when starting your new contracting career and are setting up a limited company as a contractor. Indeed, such questions on setting up a limited company in UK, starting your career and the new company formation costs could include:

  • How much does it cost to start a contracting business?
  • What should we consider in terms of how to set up a limited company as a contractor?
  • How much does it cost to be a contractor and what’s the initial cost of contracting setup?

When researching how much is it to set up a limited company, there’s a £12 standard company registration fee (UK) when you set up a limited company online with Companies House. Also, when you set up a new company (UK), you could choose to register by post on a paper form. The cost of setting up a ltd company via post is £40. However, with the speed it takes to create a limited company online nowadays, most register online.

Other initial thoughts when you open a company (UK)

Besides the cost of setting up a limited company, when you set up your own business, you should also consider pre-trading expenditure. What’s more, when you set up a UK company, we’ve a great guide on contractor business expenses. This gives an overview of what you may be able to claim through your new business.

While we are considering the company set up process, please also read our guide which covers tax tips for limited company contractors. This contains lots of great ideas which you can research after setting up a new limited company.

What’s more, besides setting up a UK limited company, we explain here the process of closing a UK company. 

The options available when you incorporate limited company 

Setting up a company in UK -form it yourself   

It’s key to bear in mind that the process when you’re setting up your own company as a contractor yourself isn’t too tricky. Besides, you can easily open a limited company online and follow the onscreen instructions. When we consider the company setup fee, the charge is £12 for the cost of limited company formation. Also, when you set up limited company online, it’ll take around 15-30 minutes to complete the ltd company registration process.

When you pay the cost to register a limited company online, there’s various options for this. Indeed, you’ll have the choice of paying this by debit card, credit card or even Paypal. 

Setting up limited company (UK) -form it through your accountant     

When we look at how much to set up a limited company for contracting, your accountant will usually be happy to complete your ltd company formation. When you’re about to go ahead with the set up limited company for contracting process, most contractor accountants are well versed in forming contracting companies for their new contractor clients. Therefore, via this method, what is the cost of setting up a limited company for contracting (UK)?

If you ask your accountant to register a limited company (UK), there may be a setting up a limited company cost or fee which they charge you. On the other hand, they may absorb the ltd set up fee when you’re setting up your own company for contracting. This is usually the case if you sign up as a client and agree to pay them a monthly fee for their services.

Once you open a limited company and have your registration papers, you can set up a company bank account. What’s more, something else to consider is whether to register for VAT. 

Ltd company setup -form it through a formation agent     

Once again, when we look at how much to set up a limited company (UK), if you ask a company formation agent to do this for you, there’ll be a charge. Therefore, how much does it cost to set up a company (UK) under this route? Basically, the setting up a limited company cost, or fee can vary between agents, as can the service they provide. There are many of these in the UK such as 1st Formations amongst many others. Some will provide extras as part of the limited company setup like setting up a business bank account and printing company papers. As part of setting up a UK limited company, they may even do the VAT registration and provide you with a mail forwarding service.

Most UK contractors prefer to let their accountants open a company in the UK for them. Some contractors, though, will choose to complete the set up as a limited company process themselves. 

The cost of setting up a limited company (UK) and what to consider 

The process when you open limited company (UK) 

You’ll need to fill in several sections as part of the setting up as a ltd company process. These are part of the form IN01 that’s available online once your company is incorporated. The details to fill in when setting up a limited company online or through the post are as follows:

  • The registered office address. This is the official address of the company. What’s more, the registered address is where the company will receive any official mail.
  • Details for the company directors. These include the director’s name, service address, residential address, date of birth, nationality and occupation.
  • The company’s proposed share capital.
  • Type of business, i.e., the company’s trading activity(s) (the SIC code signifies this).
  • The shareholder details. These include their name and addresses.
  • PSC details (People with Significant Control). These include their name, service address, residential address, date of birth and how they control the company.

Usually, when you set up a new limited company using the Companies House online service, it’s set up with the `model’ Articles of Association. Basically, this is, in effect, the company’s rule book, which’ll govern its affairs. You can create your Articles of Association should you so wish. However, this’ll involve the help of a solicitor.

Companies House will also inform HMRC and your new company during registration. As part of this, your new company will automatically be registered for Corporation Tax.

The cost of setting up a limited company and how long the process takes

Once you’ve gone through the initial setup process and the submission is complete, the turnaround time before your new company is in place is usually within 24 hours. This can take a bit longer sometimes, depending on how busy Companies House are at the time.

Official documents 

The official documents you receive after you open a company in UK

As a result of setting up a private limited company, Companies House will email you:

  • Your Certificate of Incorporation. This is effectively the birth certificate for your new company, and you should keep this in a safe place. You’ll also be able to obtain a copy of this online from the Companies House public register, should you need to.
  • Memorandum of Association `Company having a share capital’. This page will need to be attached to the model Articles of Association. You can also obtain a copy from the Companies House register.

Articles of Association

The Articles of Association is a legal document of written rules. These outline the rights and powers of the company shareholders and directors. As part of the company registration process, you can opt to use standard articles. These are known as model articles, the default set of articles established by the Companies Act 2006. On the other hand, you can write and then upload your articles to Companies House. To enable you to do this, you may need the help of a legal adviser.

You can download the model Articles of Association from the link below:

https://www.gov.uk/guidance/model-articles-of-association-for-limited-companies#examples-of-model-articles 

Other considerations after limited company registration 

Further initial tasks once you’ve set up a UK limited company

After you’ve gone through the process of setting up a UK company, the next tasks after opening a company (UK) are likely to be:

  • Search for a contractor accountant to look after your new company in future. There’s lots of choice in the UK and most contractors choose a UK contractor accountant specialist.
  • When you’re setting up in the UK, you’ll need to consider contractor business insurance. Indeed, your contract should state which cover you need. What’s more, when using Code CAUK10 you can a receive great 10% contractor discount via this website on policies from one of the best contract insurance providers in the UK.
  • After you create a company (UK), take some time to consider which accounting system you’ll use in the future. If you’re going to be VAT registered, you’ll need an online system that complies with Making Tax Digital (MTD). FreeAgent is a popular choice for UK contractors in all sorts of industries.
  • Once you set up ltd company (UK), you can open a contractor bank account for your new limited company. Starling Bank are popular with contractors however there’s three UK banks (RBS, Natwest and Mettle) that’ll pay the FreeAgent licence fee if you open an account with them.
  • Get yourself clued up as a new UK contractor. There’s lots of guides in the contractor blog on this website that cover all sorts of areas such as salary, dividends, expenses, tax guides etc. 

What are the other typical costs of running a limited company?

Besides the initial cost of setting up a limited company, there’ll be an annual fee from Companies House in the future. This fee is in respect of the Confirmation Statement, a form which needs to be submitted annually. The fee is £13 if you file online or £40 via the post (most company owners file online). The Confirmation Statement form shows all of the official details for a company. These include the registered office, directors, PSCs, trading activity(s), etc.

Other than the contracting cost of setting up a company (UK) and the annual £13 fee, any other limited company running costs (UK) will depend on your type of business. This is likely to include accountants’ fees, insurance, wages, rent or use of the home as an office. It’ll also include any other outgoings you’ll incur as part of generating income for and running your new company.

Final thoughts

We outline above what you need to bear in mind when considering the costs of setting up a limited company in the UK. When you look into limited company setup as part of your new UK contracting career, there’s several choices for the cost of setting up a company in the UK. With regards to how much does it cost to set up a limited company (UK), this isn’t usually expensive. In fact, most will complete the process of limited company set up online and pay the standard £12 fee. What’s more, many contractors and UK business owners let their accountant do this and, as a result, incur no or a minimal limited company setup fee.

When you set up as ltd company and run your own business, the only ongoing UK ltd cost from Companies House is £13 per year. This fee will be due when the business files its annual Confirmation Statement.

Finally, a £10 fee is payable to Companies House when a company closes down. You send this when you submit the form through the post to apply for this. On the other hand, the fee is £8 is you apply to close your company online via the Companies House website.

Link to Contractor Advice UK group on LinkedIn

https://www.linkedin.com/groups/4660081/

Published On: January 4th, 2024 / Categories: First timer guide, Starting Up Your Own Company /

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