Most accountants can set up a limited company for you, either for free if you appoint them as your accountant, or for a fixed fee. How much can you expect to pay for this initial service?
Do it yourself via Companies House. The electronic service costs £50 (and £71 for the paper service). If you opt for the paper version, you will need to fill in the application form and submit supplementary documents yourself.
Pay a formations agent to do this on your behalf. You can pay as little as £40 (with all paperwork delivered electronically) to £100 and beyond.
Your accountant can form a company on your behalf for a fee or for free if you sign up for their accountancy service.
Why do some accountants charge to set up a company?
Your prospective accountant will either absorb your company formation costs into its ongoing monthly fee or apply a one-off charge for the service.
This can vary wildly between firms, from £50 to over £200. So, why pay for this service?
The answer is that your accountant will do much more than simply set up your company via Companies House in return for this initial set-up fee.
In addition to the incorporation itself, you must register your new company for Corporation Tax, Value Added Tax (if applicable), as an ’employer’, and appoint your accountant to deal with HMRC.
The accountant will also need to advise you on how to structure the company’s share capital, appoint directors (and possibly a company secretary), and guide you on the most tax-efficient way to set up shareholdings.
Lastly, some contractors will already have a live limited company or will have formed one before appointing an accountant.
Some accountants prefer to charge a one-off fee to set up a new company, as including this service in the regular monthly fees could penalise contractors who already have an established company.
The bottom line
From our experience, the number of accountants who charge for incorporations has reduced massively over the years. In fact, none of our accountancy partners expect contractors to pay an additional fee for this service.
However, if you like the look of a firm that happens to charge for company formation, then this shouldn’t necessarily be an impediment to your signing up.
Ultimately, any one-off formation cost should be just one factor you consider when choosing an accountant.
Assuming monthly fees are reasonable, nothing beats the reassurance of having a reliable, friendly account manager – and good software.
