How Much Does It Cost to Set Up a Limited Company?

Starting a business takes time, commitment, and money—and while these are all worthwhile investments, costs can quickly add up if you’re not careful. For new business owners, understanding the full cost of setting up a company is essential for effective financial planning.

In this guide, we break down the costs involved in forming a limited company or LLP, highlight where you can save or spend more, and outline the ongoing expenses you should plan for.

Companies House Registration Fees

One of the first—and most essential—costs you’ll face when setting up a company is the Companies House registration fee. This is the official fee for registering a company in the UK.

There are two ways to register:

Online Registration

Registering online is the quickest and most cost-effective option. It costs £50 and is the most popular method due to its simplicity and speed. In many cases, your company can be incorporated within 24 hours, depending on Companies House processing times.

Postal Registration

You can also register by post using the IN01 form and submitting a cheque payable to Companies House. This method costs £71 and can take up to 10 days to process.

The registration fee is a one-off cost.

Legal and Administrative Costs

When forming a company yourself, you may need to prepare your Memorandum and Articles of Association (M&As). These documents set out how your company is structured and governed.

• The Memorandum of Association confirms the company name, registered office, purpose, and share capital.

• The Articles of Association outline the internal rules for running the company, agreed by shareholders or guarantors.

M&As are a legal requirement when forming a company. While templates are available, many business owners choose to consult a legal professional to ensure everything is compliant.

Legal fees for drafting M&As typically range from £100 to £150, though more complex structures can cost up to £200. These costs are usually one-off but may be included in an ongoing legal services package.

Company Formation Agent Fees

A formation agent can handle the entire company setup process on your behalf, ensuring all paperwork is completed accurately and in line with regulations. This can save time, reduce stress, and minimise the risk of errors.

In addition to company formation, agents often offer useful services such as:

• Memorandum and Articles of Association

• Registered office address

• Confirmation statement filing

• Business bank introductions

Packages range from basic to premium, allowing you to choose according to your needs and budget. Prices usually start from £55, with some services renewing annually.

For many new business owners, using a formation agent is a time-efficient and cost-effective solution in the long run.

Accountancy Fees

Hiring an accountant is another common consideration when setting up a limited company. Some accountants even include company formation as part of their service, often at a reduced cost if you sign up for ongoing support.

Ongoing accountancy services may include:

• Bookkeeping

• Tax returns

• Annual accounts preparation

• PAYE and VAT support

Annual costs typically range from £800 to £1,500, depending on the complexity of your business. For smaller companies, monthly fees can start from around £20.

An accountant can help you remain compliant, manage tax efficiently, stay updated on legislation changes, and free up valuable time so you can focus on growing your business.

Additional Setup Costs to Consider

Depending on how your business operates, you may face extra costs such as:

Business Bank Account

Some business bank accounts are free, while others charge £5–£10 per month. Paid accounts may offer added benefits like financial forecasting tools or dedicated advisors.

Insurance

Certain businesses are legally required to have insurance. Costs generally range from £100 to £500 per year. Even if insurance isn’t mandatory, it’s often advisable to protect your business.

Office Space

Office costs vary widely:

• Virtual office options can start from £50 per month

• Commercial office rentals can exceed £1,000 per month

For example, a hairdresser may need public liability insurance and may also need to rent a chair or space in a salon.

Ongoing Compliance Costs

To remain compliant with UK company law, you’ll need to budget for ongoing statutory obligations, including:

• Annual Confirmation Statement: £34 online or £64 by post

• Annual Accounts Filing: Costs vary depending on whether you file yourself or use an accountant

• Statutory Records Maintenance: May be included in accountancy or administration fees

Failure to meet compliance requirements can result in penalties, fines, or even your company being struck off the register.

How to Reduce Company Formation Costs

There are several ways to keep costs down when forming a limited company:

• Registering your company and handling filings yourself can minimise expenses, though it can be time-consuming and mistakes may be costly to correct.

• Formation agents often offer tiered packages, allowing you to choose services that fit your budget.

• Using standard templates for Memorandum and Articles of Association can help reduce legal fees.

• Creating a detailed budget allows you to plan spending, cut unnecessary costs, and prepare for unexpected expenses. A solid budget can also support loan, grant, or investment applications.

Conclusion

Forming a limited company or LLP is an exciting milestone, but it does come with costs—especially if you need professional support. The main expenses typically include registration fees, legal advice, and accountancy services.

With careful research, planning, and budgeting, it’s possible to keep formation costs manageable and avoid surprises.

If you’re unsure where to begin or need expert guidance, get in touch with us. We’ve helped form over 1 million companies since 2001 and make the process simple and stress-free—whether it’s your first company or your tenth.

Our packages include the £50 Companies House fee, free lifetime customer support, and much more.