The Cost of Company Formation

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One of the main reasons why newly formed companies fail is poor financial planning in the first year. As soon as you begin the company formation process, you begin to accumulate cost. Underestimating these costs could prove fatal to future business development. Have a look at our overview of what you could be spending money on, in those crucial first few months:

Business Planning If you are planning to prepare your business plan independently, the only expense is your time. However, if you feel you need strategic advice, you must plan for the cost of hiring an outside consultant.

Marketing and Public Relations. Regardless of how simple or elaborate your marketing activity will be, if you plan to launch your business using advertising and PR you must factor the cost of the actual activity and – if you plan to use one – the services of an outside agency.

Cost of Credit Whether your funds are from the bank or a credit card company, you must plan for the cost of interest.

Company Formation Fees. As discussed in previous posts, to form your company it is important you register and file all the necessary documents with Companies House. Many new businesses are unsure of how to do this and hire an Accountant or Lawyer to deal with the administration. This can be extremely costly, and if you are planning to take this route, you must remember to plan for their professional fees in your initial expenditure. However, you can complete the company formation process yourself from just £24.99.

Expect the Unexpected. Good business planning means being prepared for anything. Therefore it is advisable to allocate 10% of your start-up budget for unexpected costs.

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