Finance & Investments

How Much Does It Cost to Start a Limited Company?

Wondering how much it costs to start a limited company? Here’s a detailed look at the actual expenses involved.

By Mateo Green
7 Min Read
How Much Does It Cost to Start a Limited Company?
Credit: Shutterstock

Starting a limited company might sound like something reserved for big business owners, but in reality, it’s not just for the corporate crowd. Plenty of freelancers, side hustlers, and small business owners go down this route every year. If you’re thinking about it yourself, one of the first things you’ll probably want to know is: how much is this actually going to cost me?

The short answer? It’s not as pricey as you might think. But, as with anything, it depends on how you go about it. Some parts are optional, others are not, and a few might surprise you.

The Basic Cost: Registering Your Company

The first fee you’ll come across is the official one. To legally register your limited company with Companies House, you’ll need to pay a small fee.

  • Online Registration via Companies House: £12
    This is the most straightforward way and the cheapest. You can do it through the government’s official website, and most registrations are processed within 24 hours.
  • Paper Registration (by post): £40
    Takes 8 to 10 days, and obviously costs more. Not many people choose this unless they’re doing something very specific that can’t be handled online.

That’s your baseline. Just £12 if you’re doing it yourself online. Not bad at all.

Using a Company Formation Agent

Some people prefer to use a formation agent to handle the paperwork and registration process. You can think of these as one-stop shops that sort everything out for you. They usually offer various packages depending on how much help you want.

  • Basic Packages: Start at around £12 to £30. These usually include company registration and a few extra documents like share certificates.
  • Mid-Tier Packages: Roughly £40 to £80. These may come with extras like registered office services, help setting up a business bank account, or printed documents.
  • Premium Packages: Can go over £100. These tend to offer things like VAT registration, PAYE setup, or ongoing support.

Is it worth paying more? Depends on how comfortable you are doing things yourself. If you’re confident handling online forms and can read up on what’s needed, you might not need the extras. But if you want the reassurance that it’s all done properly, a formation agent can be handy.

Registered Office Address Costs

Every limited company needs to provide a registered office address. This is where official documents get sent. It’s fine to use your home address, but some people prefer not to, especially if they’d rather keep their home details private.

  • Using Your Own Address: Free, obviously.
  • Using a Registered Office Service: Between £20 and £100 per year, depending on the provider and location.

Some agents bundle this into their packages, so if you’re using one, check if it’s included.

Setting Up a Business Bank Account

It’s not a legal must, but you really don’t want to mix business and personal finances. A business bank account keeps things cleaner and makes your life a lot easier when it comes to tax time.

  • Free Options: Several challenger banks offer free business accounts, at least for the first year or more.
  • Paid Accounts: Range from £5 to £15 a month, depending on the bank and features.

Some offer perks like invoicing tools or integration with accounting software. Think about what you actually need before jumping into a paid plan.

Accounting and Bookkeeping

Even if you’re good with numbers, running a limited company usually involves more admin than being a sole trader. You’ll need to file annual accounts, corporation tax returns, and possibly VAT returns if you’re registered.

  • DIY Software Subscriptions: Expect to pay £10 to £30 a month for cloud-based accounting tools like FreeAgent, Xero, or QuickBooks.
  • Hiring an Accountant: Prices vary massively. For a small company with simple accounts, expect around £300 to £800 a year. For more complex setups, it can go much higher.

If you’re just starting out and funds are tight, you might try doing it yourself with software. But once things pick up, having a proper accountant can save you time and stress.

Other Optional Costs

There are a few other things that aren’t essential but might be worth considering depending on your situation.

Domain Name and Website

If you’re setting up a company, chances are you’ll want an online presence.

  • Domain Name: Usually £10 to £20 per year.
  • Website Hosting: Anywhere from £3 to £30 per month.
  • Website Building: DIY tools like Wix or Squarespace start at around £10/month. Hiring a designer can run into hundreds or even thousands.

Business Insurance

Not always mandatory, but can be a smart move.

  • Public Liability or Professional Indemnity Insurance: Often starts around £10/month, depending on your industry.
  • Employers’ Liability Insurance: A legal requirement if you hire staff. Starts at around £60/year.

Trademarks

Want to protect your brand name or logo?

  • Registering a Trademark: Starts at £170 for one class and £50 for each additional class.

Rough Total: What’s the Bottom Line?

If you’re going DIY all the way and just using your home address, here’s the bare minimum:

  • Company registration: £12
  • Business bank account: Free (depending on provider)
  • Accounting software: Let’s say £15/month
    First year total: Around £192

If you go for a formation agent and a few extras, things look more like this:

  • Company formation package: £50
  • Registered office address: £40/year
  • Business bank account: £10/month (optional)
  • Accounting software or accountant: £300–£600/year
    First year total: Between £400 and £800+

Of course, that’s just an estimate. Your actual setup might cost more or less, depending on your choices. But it gives you a ballpark to work with.

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