If you’re starting a business in the UK, one of your first questions might be: how much does it cost to register a business? Whether you’re setting up as a sole trader or forming a limited company, understanding the costs involved is the first step of your plan. In this guide, we’ll break down the registration fees, any extra costs, and what happens after you register.
What is the cost of registering a company?
Registering a company’s cost depends on how you choose to register:
1. Online registration
Registering a company online with Companies House currently costs £50. This is the quickest and cheapest way to register and usually results in approval within 24 hours.
2. Postal registration
If you choose to register by post, the cost increases to £71, and it typically takes 8-10 days to process.
3. Using an agent
Many people prefer to use an accountant or third party to handle the registration process. Costs for this service vary but typically range from £50 to £200, depending on the case.
Five additional costs to consider
While the direct cost of registering a business is low, there are other expenses you need to consider when setting up your company:
1. Business name considerations
If you want a specific business name, you may need to check for trademarks and ensure it’s not already in use. Securing a domain name for your website could also cost between £10 and £50 per year, depending on the domain type, extension and any add-ons.
2. Accounting and bookkeeping
Hiring an accountant or purchasing accounting software adds to your expenses. Basic accounting software starts at around £100-£20 per month, while an accountant may charge £50-£200 per month. This will depend on your business size, location and the services you provide.
3. Insurance
You may need business insurance, such as public liability or professional indemnity insurance. Costs start at around £100-£200 per year, but this can vary widely depending on your industry, the services you provide and the level of coverage.
4. Office or workspace costs
If you’re renting an office or workspace, this will be an extra expense. Even if you’re working from home, you may need to budget for equipment or renovations to create your ideal office space.
5. Ongoing compliance fees
Annual fees, such as the confirmation statement fee (£34 online or £62 by post), should also be factored into your budget.
💡Editor's insight: "I find a lot of people don’t realise they need to file a confirmation statement every year. It confirms that the info that Companies House has is up-to-date. If you don’t do this, you can be struck off the Companies House register and could face a fine in the criminal court.”
What do you need to set up a limited company?
Before registering a limited company, ensure you have the following:
A unique company name: It must not be identical to an existing registered name and follow Companies House rules.
A registered office address: This is your official address where Companies House and HMRC will send emails and letters.
Details of directors and shareholders: You’ll need to provide personal information about the company’s directors and shareholders. This will include their addresses and shares.
Memorandum and articles of association: These documents outline the company’s purpose and how it will run. You can use templates or draft your own memorandum and articles of association.
Share capital information: If issuing shares, state how many shares the company has and their value.
What happens after the business is registered?
Once you have registered your company, here are the next important steps to take:
1. Receive your certificate of incorporation
Companies House will issue a certificate of incorporation as proof that your company exists. This certificate proves a company is registered with Companies House and is known as a company’s birth certificate. This document includes your company number and registration date.
2. Register for taxes
You’ll need to register for taxes with HMRC, including:
Corporation Tax for limited companies.
Self-assessment tax for sole traders.
VAT if your turnover exceeds the threshold (currently £90,000 per year).
3. Open a business bank account
Most banks need a certificate of incorporation and company details to open a business account.
4. Set up accounting systems
Choose an accounting system or hire an accountant to manage your financial records, payroll, and filing your taxes.
FAQs
Do I need to register my small business?
Yes, if you’re earning income through your business, you’ll need to register with HMRC for tax purposes. Sole traders register for self-assessment, while limited companies register with Companies House.
How much does it cost to register a business as a sole trader?
Registering as a sole trader is free, but you’ll need to register for self-assessment with HMRC. While there’s no initial fee, you’ll need to set aside funds to cover taxes. You will also need to pay national insurance in most cases, and any other business-related expenses.
Final thoughts
In this guide, we’ve broken down the potential cost of registering a business in the UK. Don’t forget to plan for additional expenses like insurance and accounting. Whether you’re setting up as a sole trader or creating a limited company, knowing the process can set you on the path to success.
Need help with business registration? Our expert team is here to guide you every step of the way as small business solicitors. Let us simplify the process so you can focus on growing your business.
References
Incorporation and names by Gov.UK
Self Assessment tax returns by Gov.UK
Disclaimer: This article only provides general information and does not constitute professional advice. For any specific questions, consult a qualified accountant or business advisor. Bear in mind that tax rules can change and will differ based on your circumstances.