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​ How much does company formation cost?

So you want to start a business, and you’ve got a great idea that you think will fit into the current market perfectly. The biggest obstacle to get past after that stage is figuring out how much money is going to be involved in turning that idea into a reality.

We highlight some of the key financial considerations when setting up your business.


Registering your business is always going to be your first step once you’ve planned out your business plan. Every business has to register in some way, no matter what form their business takes. Thankfully, the process is extremely simple on with very minor financial costs associated.

How much does company formation cost?

If you are creating a Limited company, then you need to have met some specific obligations first before you are able to register. These obligations include designating at least one director, detailing your shares, and creating your memorandum and articles of association.

Once you have done this, you can simply register your company with Companies House through the UK Government’s website and pay a small fee of £12. However, as a Limited company, you also need to register your business for corporation tax within three months or you could face significant fines. This should be done as soon as you receive your Unique Taxpayer Reference from HMRC, which will arrive a few days after you have successfully registered your business.

If you’re setting up a sole trader instead, then the process is simpler. Unlike setting up a Limited company, there’s nothing more you need to do other than fill in one form on the Government’s website to let them know you’re operating a business. Once you’ve done so, you’re free to begin trading.


Premises will be one of your main financial considerations, and there are several things you should keep in mind when choosing where to base your business. For example:

  • Is the property a good balance between affordability and growth potential?
  • Is the location reachable by clients or staff?
  • Is the location highly visible to members of the public?

For example, you might feel like one building is the perfect size for your business, and is well within budget. However, if your business begins to take on more work, and you no longer have the ability to complete tasks efficiently because of a lack of space, then the premise will not be right for you.

Think of your premises as more of an investment in your own business. A cheap place in a poorly visible location could be detrimental because not enough people can see your business. Premises in the centre of town may cost more, but can help facilitate awareness of your brand and bring in more customers, which will offset the increased cost.

You could also consider working from home during the early stages of your business. This removes a significant initial cost, while also allowing you to grow the business for a while first. You should be able to make detailed business projections before long which will allow you to estimate the size your premises will need to be and how much growth you can accommodate before needing to expand.  


Another significant cost will be funding the equipment and materials required to meet your business needs.

What this encompasses depends entirely on the kind of business you are, however. For example, if you’re creating an accountancy firm, you will mostly need desks, computers, and storage cabinets for filing purposes.

 Depending on the scale of the business, this may be just one computer for you as a sole trader, or several. For a more stock-based business – for example, a shop – one of the main concerns at the start would be overestimating demand, and wasting money as a result of purchasing far more than your customers will purchase. Try to temper your expectations in the early stages so that you don’t end up spending far more than necessary.

How can FSB help with company formation?

FSB can provide you with a highly-experienced service dedicated to helping you establish your business and making the process as simple as possible for you.

Key features and  benefits of FSB Company Formation include:

  • Printed Certificate of Incorporation
  • Online company formation
  • Electronic Memorandum & Articles of Association
  • All documentation posted to you First Class on the first working day after formation

To find out more about company formation and how we can help, get in touch with a member of the team or visit our FSB Company Formation page.

Company Formation from FSB

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