The cost of setting up a limited company

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Introduction 

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

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 starting a limited company contract, you must 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 of the limited company set-up process is the contractor cost of setting up a limited company (UK). Therefore, when looking at how much it costs 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 are, 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 associated various levels of limited company set-up costs.

Initial thoughts 

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

Are you ready to proceed with your limited company set-up and undergo private limited company formation? This guide will research the processes available when starting a limited company and the associated company set-up costs.

  • The first choice when setting 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 have an accountant, you can ask them to form a limited company.
  • A third choice when starting up a limited company is to use a formation agent for a private limited company setup.

Some more initial questions may arise when starting your new contracting career and setting up a limited company as a contractor. Indeed, such questions on setting up a limited company in the 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 regarding 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 it costs to set up a limited company, there’s a £50 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 £71. If you need to set up a company on the same day, the cost is £78. However, with the speed it takes to create a limited company online nowadays, most register online. 

Common questions

When you open a Ltd company (UK) for the first time, you may have questions about the cost of setting this up. Such questions will cover how much it costs 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 the 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 in the UK?
  • What’s the fee to set up a limited company (UK)?
  • How much does it cost to register a limited company in the UK?
  • How do you establish a company in the UK?
  • What do you need to set up a company?
  • How do you open a company in the UK?
  • How can you set up as a limited company?
  • When can you set up your own company?
  • How do you set up a company in the UK?
  • How do you start a company in the UK?

This guide will examine the cost of registering a company (UK). We’ll also learn how to create a limited company and how much it costs to set one up.

Other initial thoughts when you open a company (UK)

When you set up your own business, you should also consider pre-trading expenditures in addition to the initial setup costs. Moreover, we have a great guide on contractor business expenses when you set up a UK company. This gives an overview of what you can claim through your new business.

While considering the company set-up process, please read our guide, which covers tax tips for limited company contractors. It contains many great research ideas after setting up a new limited company.

Furthermore, we explain the process of closing a UK company here. 

What options are available when you incorporate a limited company? 

Form it yourself when setting up a company in the UK

It’s key to remember that 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. Considering the company setup fee, the charge is £50 for limited company formation. Also, when you set up a limited company online, completing the Ltd company registration process will take around 15-30 minutes.

When you pay the cost to register a limited company online, you have various options. Indeed, you can pay by debit card, credit card, or even PayPal. 

Let your accountants set up a limited company (UK)

When we look at how much it costs 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 proceed with the 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), they could charge you a set-up cost or fee. On the other hand, they may absorb the Ltd set up fee when 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.

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

Use a formation agent for ltd company setup

Once again, when we look at how much it costs to set up a limited company (UK), there’ll be a charge if you ask a company formation agent to do this. Therefore, how much does it cost to set up a company (UK) using this route? 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, such as 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 decide to complete the set-up as a limited company process themselves. 

What is the cost of setting up a limited company (UK) & what should you consider? 

Open a limited company (UK) process 

As part of the setting up as a Ltd company process, you must fill in several sections of the application process. These are part of the IN01 form and will be 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 company’s official address. What’s more, the registered address is where the company will receive 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. This is, in effect, the company’s rule book, which governs its affairs. You can create your Articles of Association should you so wish. However, this will involve the help of a solicitor.

Companies House will also inform HMRC and your new company during registration. Your new company will automatically be registered for Corporation Tax.

What is the cost of setting up a limited company & how long does it take?

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. However, it can sometimes take a bit longer, depending on how busy Companies House is at the time.

Official documents 

The official documents you’ll receive once you open a company in the 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 the need arise.
  • Memorandum of Association `Company having a share capital’. This page can 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 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 require 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 thoughts after limited company registration 

What are the 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 following tasks after opening a company (UK) are likely to be:

  • Search for a contractor accountant to look after your new company. There are many choices in the UK; most contractors work with a UK contractor accountant specialist.
  • When setting up in the UK, consider contractor business insurance. Indeed, your contract should state which coverage you require. What’s more, using Code CAUK10, you can receive a fantastic 10% contractor discount on policies from one of the best contract insurance providers in the UK via this website.
  • 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 require an online system which complies with Making Tax Digital (MTD). FreeAgent is a popular choice for UK contractors in all sorts of industries.
  • Once you set up a Ltd company (UK), you can open a contractor bank account for your new limited company. Starling Bank is popular with contractors; however, three UK banks (RBS, Natwest and Mettle) pay the FreeAgent licence fee if you open an account with them.
  • Get yourself clued up as a new UK contractor. This contractor blog has many guides covering salary, dividends, expenses, tax guides, etc. 

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

In addition to the initial cost of setting up a limited company, Companies House will charge an annual fee in the future. This fee applies to the Confirmation Statement, which you’ll submit annually. The cost is £34 if you file online or £62 via the post (most company owners file online). The Confirmation Statement form shows all the company’s official details, including the registered office, directors, PSCs, trading activity(s), etc.

Other than the contracting cost of setting up a company (UK) and the annual £34 fee, any other limited company running costs (UK) will depend on your type of business. These are likely to include accountants’ fees, insurance, wages, rent or use of the home as an office. They’ll also include any other outgoings you incur to generate income for and run your new company.

Final thoughts

We outline what to consider when considering the costs of setting up a limited company in the UK. When you research a limited company set up as part of your new UK contracting career, there are several choices for the cost of setting up a company in the UK. It isn’t usually expensive when considering how much it costs to set up a limited company (UK(. Most will complete the limited company setup process online and pay the standard £50 fee. Moreover, many contractors and UK business owners let their accountants do this and, as a result, incur no or a minimal limited company setup fee.

When you set up as a company and run your own business, the only ongoing UK Ltd cost from Companies House is £34 per year. This fee is due when the business files its annual Confirmation Statement.

Finally, Companies House charges a £44 fee online when a company closes. You must send this when you submit the form through the post to apply for this. On the other hand, the fee is £33 if 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: April 6th, 2024 / Categories: First timer guide, Starting Up Your Own Company /

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