There are several ways to set up your own limited company, as well as several costs to consider when creating the company. It is surprisingly simple to set up your company compared to the initial effort involved in starting your business. Depending on the route that you choose, you can register a limited company within 24 hours and at very little cost.
In addition to the initial registration of your company, there are further business costs such as rent, wages, utilities, and marketing assets that need to be considered when setting up a limited company.
A limited company is a business structure that limits the amount of liability undertaken by the company’s shareholders. Limited liability provides protection for your business if it were to fail by ensuring that you are only liable for the face value of your share in the business and guarantees that your personal assets are protected.
Ownership within a limited company can be easily transferred, and many of these companies have been passed down through generations. Public companies allow anyone to buy shares and membership in a limited company, whereas membership in a limited company is governed by that company’s rules and laws.
One of the many advantages of a limited company includes the separation of assets and income from the owners and investors through limited liability and the corporation. Creditors and stakeholders within that company can only lose as much as their original investment if the company were to go through financial distress, meaning that the company structure acts as a defence between the finances of the company and its owner.
Your limited company can be set up for as little as £12 depending on the venue you decide to take. If you are looking to pay an intermediary professional to do this on your behalf, you will inevitably pay more. There are 3 main routes to set up a new company:
For the most direct route, you can set up your company directly with the registrar - Companies House. Registration can be done online for £12 or papers can be submitted physically via Form IN01 for an additional cost of £40. Your application will require your shareholders' information and your personal information.
Another route of setting up your limited company is to hire a formation service or agent to incorporate on your behalf. Formation agents are a more costly option than directly setting up your company yourself, however, they provide a range of add-ons and benefits such as virtual office spaces, accountancy packages, business banks, and more.
Accountants are an integral part of setting up a limited company as they aid in ensuring that all of your finances and everyday taxes are correctly paid. For many, the idea of becoming a company director can be intimidating, therefore a specialist accountant can help with responsibilities and the formation itself. Prices of accountants vary tremendously depending on the services that you require, but it is useful to note that a lot of accountants offer monthly services or one-off fees - whichever works best for you.
Your limited company must pay corporation tax on its profits, like any other company or business. If your company is registered through Companies House, you must document it for corporation tax within three months of your company being deemed active.
Both registrations can be done at the same time, and it is encouraged that this is how you proceed. Once your limited company is active, it is able to provide services and commence trading, meaning that it is legally obligated to pay corporation tax on any returns.
There are a number of things that are necessary to set up a limited company. Not all of them are costly but they are imperative steps that must be completed before your company can launch:
Limited companies require a registered name. The general rules for a company name are that your title cannot be the same as an existing company name, it cannot be offensive, and it should typically include the word ‘limited’.
There are some cases where you will not need to include ‘limited’ in your company name; if you want to trade under a name different to your registered company name, it must not include ‘limited’.
An IN01 form is a compulsory form that must be completed in order for HMRC and Companies House to send legal correspondences. The information on the IN01 form will include information such as your NI number, passport number, and registered limited company address.
This is a legal document of regulations that outlines the rights and powers of the company shareholders and directors. Standard articles are available but with help from a legal adviser, you can create your own.
In addition to the crucial legal fees that must be paid in setting up a limited company, you must also consider the further costs involved with setting up a new business, for example:
The cost of starting a limited company in the UK is typically dependent on your personal business goals and particular needs. Traditionally, a limited company can be most cost-effective in the long run, especially when it comes to limiting your liability. The specific expenses involved with the initial registration of your company are surprisingly low.
Halkin offers a range of spaces available to limited companies. Founded with over twenty years of industry experience, we offer a Smart Working Membership to truly serve the needs of SME businesses and entrepreneurs. We provide office spaces that can help alleviate the worry of premises costs when setting up your limited company; these are all co-working spaces, managed offices and serviced offices in prestigious London locations.
Explore the offices available to rent or browse our virtual office spaces created to encourage the growth and success of businesses everywhere.