WhatsApp
Register a Limited Company for just £93.99 Including Government fee : Apply Now!
Ongoing costs are one of the drawbacks of registering a company in the UK. Limited companies in the UK need maintenance, which incur costs annually or even monthly, depending on your company’s business activities.
The maintenance costs vary depending on the size, needs and the services offered by a company. This article will highlight the average maintenance cost a company can incur to help business owners understand and make an informed decision when registering a company in the UK.
An overview of the maintenance costs for UK companies
The cost that will be incurred by a company depends on the method used to incorporate and also the annual reporting. Limited companies in the UK must file a Confirmation Statement, Corporate tax, Annual Accounts and VAT.
UK companies must prepare their accounts following UK accounting standards, such as the Financial Reporting Standards for Smaller Entities (FRS 102) or International Financial Reporting Standards (IFRS). This means companies must use software that works with Making Tax Digital, which incurs costs.
The fixed costs
Statutory fees
Every company registered in the UK, trading or dormant, must file a Confirmation Statement annually. Reporting Confirmation Statements notify Companies House of any changes that have taken place in the company. The confirmation statement must be filed with Companies House, whether there are changes or not in the company.
Companies House’s fee for filing a confirmation statement is £34 annually. This fee applies if you are filing directly with Companies House. The cost can be more if an accountant or a company formation agent files it on your behalf.
For instance, Icon Offices charges a one-off fee of £11.99 including VAT, plus a Companies House fee of £34, totaling £45.99.
Accountancy fees
The accountancy fee may vary from one company to another, depending on the complexity of your business’s financial situation. Accountancy services may include filing of the annual accounts, tax returns, and bookkeeping.
A company can decide to do all these in-house, which will still incur costs but will be lower than hiring an accountant.
To file annual accounts directly with Companies House, you will incur £14 for electronic filing via WebFiling or Software Filing, and £40 for paper filing. The first annual accounts must be filed 21 months after your company’s incorporation. The rest you must file 9 months after the end of your company’s financial year.
All registered companies must file for Corporate Tax on their profits. Other taxes a company must file include: Value Added Tax (VAT) if applicable, and Pay-As-You-Earn (PAYE) if you have employees.
With an accountant, HM Revenue and Customs (HMRC) fees will be added to their service charge since they supply more than the HMRC. They offer tax advice, help the company comply, keep you updated on any tax changes and manage all accounting affairs, including bookkeeping.
Accountancy services also include a registered office address. The company rents an address, which will be paid quarterly or annually, depending on the plans offered by your service provider. Company formation agents also offer accountancy services on a fixed fee package.
When choosing an accountant or a service provider, check the kind of fee model offered, since some models, like the variable fee model, are expensive because they are charged for every service you subscribe to. Fixed-fee plans are a structure that will help you plan your finances and get the support your company needs.
When looking for an accountant or a company formation agent, ensure to check if there are any hidden charges.
Business insurance
Some businesses require applying for business insurance policies. Employers’ liability insurance is legally required for companies that employ one or more employees. The insurance protects the company if an employee gets injured or sick due to work. The cost of the employer’s insurance depends on the type of work and the number of employees. The insurance fee may be between £60 and £300 per employee annually.
Other insurances include public liability, professional indemnity, commercial motor insurance and other business insurance. The public liability insurance covers your business against claims from members of the public who are injured or have their property damaged while on your premises or due to your business activities.
Professional indemnity insurance covers businesses that offer professional services, such as lawyers, accountants or consultants, against claims for negligence or errors in their work.
Commercial motor insurance covers damage to other people’s property or injury to other people if your vehicle is involved in an accident. Businesses that use motor vehicles for business purposes must have this insurance.
The cost of all these insurances depends on the needs of the company. Insurance companies have packages that suit businesses’ needs.
Additional costs
Business bank account
Some banks have a monthly fee and additional services. One of the factors to consider when choosing a bank to open a business account is whether the services offered by the bank are worth paying for. The monthly business bank account fee can range from £5 to £100.
Bookkeeping software
If you have not onboarded an accountant, you need bookkeeping software for accurate financial reporting and filing your company’s taxes with HMRC. The software helps manage and record all financial transactions, including income, expenses and assets.
The cost of the software differs depending on the cloud-based software you are using. They include Xero (from £16 to £59 per month), QuickBooks (from £14.50 to £29 per month), Sage (from £6 to £15 per month) and FreeAgent (from £9.50 to £16.50 per month).
Company expenses
The other ongoing costs are the company expenses, ranging from operating, capital and non-operating expenses.
Operating expenses include: office rent (if you have a physical office), utility bills, supplies, marketing, legal fees, and wages.
Capital expenses include: equipment, raw materials and property. Whereas, non-operating expenses include interest expenses if you have a loan, and investment income.
Other expenses include professional fees, travel expenses and research and development if your business is associated with developing processes or new products. All these depend on the business activities of your company.
To conclude, the annual maintenance cost of a company in the UK differs. There are fixed and additional costs depending on the size and the business activities. The aforementioned ongoing costs are not exhausted.
Icon Offices offers services that help companies with ongoing costs at an affordable price. From company formation, we help companies acquire a registered office address, file confirmation statements, annual accounts, VAT registration and returns, trademark registration, and EORI number application for businesses in import and export activities.
We also offer branding and communication services, which include company logo creation, UK virtual numbers, call answering and VoIP landlines. These services can be accessed separately or as an additional service in fixed packages, which are way more affordable.
Our all-in-one solution is perfect and affordable for every business type, regardless of the business activities. Maintaining a limited company can be costly, but with Icon Offices, we help you save more.
Contact us today to lower your company’s annual maintenance cost at [email protected].
