Whether you’re launching a side hustle or building your full-time dream business, one of the most important steps is understanding the costs of setting up a limited company in the UK.
From registration fees to insurance, the expenses can quickly add up. But with careful planning, you can avoid costly surprises and make every penny count. The UK’s leading company formation agent, Rapid Formations, will break down the essential startup costs in this guide.
The initial costs of setting up a limited company
Your startup costs begin with company registration. This means legally establishing your business as a separate entity with Companies House, the UK’s registrar of companies.
Fortunately, the UK is one of the cheapest countries for launching a business. Setting up a limited company costs just £52.99 with Rapid Formations, a Companies House authorised e-filing agent.
You can file your application yourself directly with Companies House if you wish. However, professional help costs just £2.99 more, and you’re guaranteed to have your application submitted error-free.
Below are a few other startup costs to factor in during the registration stage:
Articles of association
Most new limited companies opt for model articles, a free set of standard articles from Companies House that explain how the company will operate. If you’d like to amend them or set up a limited company with entirely bespoke articles, you’ll need to factor in legal fees, which vary widely.
Generally, you can expect to pay upwards of £1,000 plus VAT or just £90 plus VAT with Rapid Formations’ Drafting Service.
Domain, web, and email hosting
While these aren’t essential company setup costs yet, we recommend securing your domain name and a web and email hosting platform as soon as possible. You’ll need these to build your online presence.
Depending on the provider and bundle, costs usually range from £10 to £100.
Common business startup costs to budget for
Once your company is officially registered, it’s time to prepare for launch. Your startup costs will vary depending on the nature and scope of your business, but here are some key expenses most companies will need to budget for:
Office or workspace
Where you work will significantly impact your company set up costs. The most budget-friendly option is to work from home, which new founders commonly use.
If you need a commercial space, average UK prices reach £150 per square foot, depending on size and location. Launching a service-based business that requires a physical location (e.g., a hair salon or café) will be more costly.
Software
Cloud accounting tools like Xero or QuickBooks, CRM platforms, project management tools, and cybersecurity services are vital. Depending on your needs, subscription costs can add up to £50–£200 per month.
Insurance
While it’s not an essential startup cost, we highly recommend purchasing business insurance to protect yourself and your company. Consider public liability or professional indemnity insurance. Premiums vary between £100 and £1,000 per year.
Hiring
If you plan to employ staff, you should budget for your recruitment expenses, salary obligations, National Insurance contributions, and any benefits you wish to offer your teams.
Top tip: Don’t forget to register as an employer with HMRC and take out employers’ liability insurance if you hire staff.
Marketing and branding
Marketing costs are difficult to estimate. However, you should generally budget for website and logo design.
If you need a creative agency, expect to pay £50-£200+ per hour. Freelancers are more affordable if you need design assistance, at around £80 per request.
Advertising costs are typically adjustable to your budget.
How to control (and reduce) your company setup costs
Business startup costs can add up fast, but there are ways to reduce them. Consider these money-saving options when launching:
- Opt for flexible workspaces – Co-working spaces start at around £150 per desk per month. Alternatively, serviced offices range between £180 and £950 per month.
- Go digital – Cloud-based software often offers free tiers or startup discounts.
- Insurance bundles – Find the best deals on comparison sites and benefit from a multicover discount when you take out several policies with one provider.
- External professionals – Team up with a third-party service to handle functions like customer service or front-of-house support rather than hiring in-house staff.
- Free marketing strategies – Search engine optimisation (SEO) and social media engagement are low-cost ways to grow your organic reach and brand awareness.
- Choose a company formation agent – Avoid legal fees by registering your company with a formation agent. You’ll typically also get additional freebies, like a domain name.
While there are several startup costs, don’t let that discourage you from entrepreneurship. Research, preparation, and simple budgeting can help keep your expenses low.
There’s also financial support available for startups and growing businesses, so make the most of them. Consider government grants, bank loans, crowdfunding, or angel investments to ease the cost of setting up a company.
Navigate your startup costs with confidence
Setting up a limited company in the UK doesn’t have to be expensive or overwhelming. With registration fees as low as £52.99, you can start small and gradually scale. Beyond the formalities, readiness comes from understanding the operating costs that follow and preparing for them with an intentional budget.
Ready to take the next step? Set up your limited company today with the UK’s leading company registration agent, Rapid Formations. With affordable packages and an extensive hub of helpful money-saving tips, they can help you launch your dream startup with confidence.
