So, how do I start my own company?

I recently left the world of 9-5 software development, and now I work from home as a freelancer. While it’s not required, many people doing this in the UK set up their own limited company.

I’m going to describe the process of getting yourself set up in this way. I think you’ll be surprised how little work and money you actually need to become director of your very own company.

Firstly, you actually need to create the company. Companies in the UK are registered with http://www.companieshouse.gov.uk/ and you can fill in forms and pay a small fee to do it directly. But many companies will do all this for you – you simply select a company name and give some details and they do the rest. You can do it all online, even, and in most cases your company will exist by the end of the day! Places like here allow you do do it for just £75 (+VAT).

To start a company you must have at least one director (you) and you must also have a company secretary. This person has very few responsibilities and does not have to receive shares in the company or a salary… many people use their wife/husband/parent.

You will also want a business bank account. All the banks you’d go to for a personal account also provide business accounts, but there is a tendency for them to charge for just about every action you’d want to take. I have been recommended The Abbey by many people, as not only is it free, but you can operate your account online. You can also apply for an account without having to go and visit them – you just post them an application form and some photocopied proof of identity/address.

Finally, you’ll probably want to hire an accountant. It’s not at all essential but unless you want to delve into tax law, and are confident you can do it all correctly, an accountant is something you need. As well as making sure you don’t accidentally commit fraud, an accountant can figure out what you can claim as expenses against tax, and generally make sure you pay as little tax as legally allowed.

Personally, I’d rather be making money than poring over tax documentation. I signed up with Quay Accounting. For £66 (+VAT) a month, they do everything. I will give them my income and expenses each month and they will not only do the tax for my company, but also my personal tax returns, as well as sorting out the salary I am paid by my company. They also operate a company creation service (it cost me £100 to get my company set up) and can provide a bank account, although I preferred the Abbey account over theirs. Basically, using a full package like this means I can get on with doing some actual work.