Whether you want to create a limited company for the first time or expanding your existing business portfolio, it’s important to understand the costs involved to plan your finances effectively.
This guide will cover the key expenses you can expect when forming a company in the UK.
1. Types of Companies You Can Form in the UK
Before delving into the costs, it’s important to understand the different types of companies you can set up:
- Private Limited Company (Ltd): The most common type of company in the UK, ideal for small businesses as it limits the personal liability of its owners.
- Public Limited Company (PLC): Suitable for larger businesses, allowing them to raise capital by selling shares to the public.
- Limited Liability Partnership (LLP): A hybrid structure that combines the benefits of a partnership and limited liability.
- Sole Trader: Technically not a company, but a popular option for freelancers and self-employed individuals.
This article focuses primarily on setting up a Private Limited Company (Limited or Ltd), although you can also register as a sole trader with us.
2. Choose a Company Name
Your company must have a unique name. The name should not be identical or too similar to another existing company and it must not be offensive or misleading.
- Check availability: You can search this through the name checking tools throughout our website to ensure that your chosen name isn’t already taken.
- Consider your brand: While it’s not strictly necessary, many property investors choose a name that reflects their business or brand, especially if they plan on scaling their portfolio.
3. Registering a Domain Name and Obtaining an Email Address
In today’s digital age, an online presence is crucial for any business, including construction companies. After setting up your legal entity:
- Domain Name: Choose a domain name that reflects your business identity. It’s often beneficial to align it closely with your company name for brand consistency. Use our domain registration service.
Use our domain name search tool to find available names for your business.Protect your Company Domain Name
- Email Address: Once you have your domain, set up a professional email address. We have “no technical skills required” email setup to allow you to create email addresses like info@yournewcompany.co.uk. This not only looks professional but also helps in keeping business communications separate from personal emails.
4. Company Formation Costs: The Basics
The cost of forming a company in the UK varies depending on how you choose to register it. Below are the primary options:
a) Registering Online Through Companies House
- Cost: £50
- Process: Registering direct is a popular option although there is a lot of duplicate data entry on the Government site. You’ll need to complete the form (IN01) and provide basic information about your business, directors, shareholders and a registered office address.
There are no optional extras or freebies with this option. - Turnaround Time: Typically, companies are registered within 24 hours.
b) Postal Registration
- Cost: £71
- Process: If you prefer to register your company by post, you will need to complete the same form (IN01) and send it to Companies House. This method is slower and more expensive than online registration.
- Turnaround Time: It can take 8-10 working days for postal applications to be processed. If you make a mistake the forms will be posted back to you and you’ll need to start again.
c) Using a Company Formation Agent
- Cost: Ranges from agent to agent but budget for £20 to £100+ (depending on the package)
- Process: Many small businesses choose to use a company formation agent for our hassle-free experience.
- Advantages: Formation agents can handle all the paperwork for you, and some even offer same-day registration services.
5. Additional Costs to Consider When Forming a Company
a) Registered Office Address
- Cost: £20 – £150 per year (depending on location)
- Every company must have a registered office address in the UK where official correspondence can be sent. If you do not want to use your home address, many formation agents offer virtual office addresses for an annual fee.
b) Director’s Service Address
- Cost: £10 – £50 per year
- Directors of the company are legally required to provide a service address. To protect privacy, some directors use a third-party service to avoid listing their personal home address publicly.
c) Company Bank Account
- Cost: Free to £10 per month (depending on the bank) – You can open an account on our website with Zempler Bank.
- While it’s not legally required to have a separate business bank account, it’s highly recommended for managing finances and maintaining clear accounting records. Many UK banks offer free business banking for the first 12-18 months, so it’s worth shopping around for the best deal.
d) Domain Name and Website
- Cost: £5 – £100+ for a domain, £100 – £500+ for a website
- A professional website is crucial for most businesses today. The cost will vary depending on whether you use a DIY website builder or hire a web developer.
By understanding these costs upfront, you can budget effectively and avoid surprises along the way. Forming a company can be a straightforward and cost-effective process if you take the time to plan your expenses and explore your options.
If you’re ready to start your business, take advantage of the resources available, and remember that every penny saved at the start can be reinvested into growing your company.
Good luck with your entrepreneurial journey!
Related reading:
How long does it take to set up a limited company?