How To Set Up a Limited Company: Step-by-Step

Before You Incorporate: Is a Limited Company Right for You?

Setting up a limited company is a significant step, and it's worth making sure it's the right one for your situation before you start. The main reasons people incorporate are: to limit their personal liability, to pay less tax at higher profit levels, or because clients or contracts require it.

If you're just starting out and your income is modest, a sole trader structure is often simpler and more cost-effective. But if you're confident about incorporating, read on — the process itself is quick and straightforward.

Choosing Your Company Name

Your company name must end in "Limited" or "Ltd" (or the Welsh equivalents "Cyfyngedig" or "Cyf" if you're based in Wales). It must be unique on the Companies House register, and it must not contain restricted or sensitive words without approval.

A few things to bear in mind when choosing:

• The name must be different enough from existing registered companies — not just identical ones
• Punctuation, spaces and common words like "the" and "and" are ignored in the uniqueness check
• Words like "bank", "royal", "chartered" and "NHS" require approval from a relevant body
• Registering a company name does not give you trademark protection — that's a separate process

Once you've chosen a name, check it's available using the Companies House name availability checker before you commit to it on branding, domain names or stationery.

Your Registered Office Address

Every limited company must have a registered office address in the UK. This is the official address where Companies House and HMRC will send correspondence, and it will appear publicly on the Companies House register.

It doesn't have to be where you actually work — many small company owners use their home address, their accountant's address, or a registered office service. If you use your home address, be aware that it will be publicly visible. A registered office service (typically £50–£100/year) gives you a professional address and keeps your home address private.

Directors, Shareholders and Share Structure

A limited company must have at least one director. Directors are responsible for running the company and ensuring it meets its legal obligations. As the founder, you'll almost certainly be a director. You must be at least 16 years old and not be disqualified from acting as a director.

Shareholders own the company through shares. In a simple one-person company, you'll typically be the sole director and sole shareholder. If you're setting up with a business partner, you'll each hold shares — and it's important to agree upfront on the split and what happens if one of you wants to leave.

For most small companies, the simplest share structure is to issue a small number of ordinary shares (say, 100) at £1 each. This gives you flexibility to transfer or issue shares later without the numbers becoming unwieldy. You don't need to pay for the shares upfront unless you choose to.

If you're setting up with co-founders, it's strongly advisable to have a shareholders' agreement drawn up by a solicitor. This sets out what happens in various scenarios — a founder leaving, a dispute, a buyout — and can prevent serious problems down the line.

How To Register: Step by Step

The Certificate of Incorporation

Your Certificate of Incorporation is the document that confirms your company legally exists. It includes your company name, company registration number (CRN), the date of incorporation, and confirmation that the company is a private limited company.

Your CRN is an 8-digit number (or 2 letters followed by 6 digits for companies registered in Scotland or Northern Ireland). You'll use it on all official company documents — invoices, letters, your website — and you'll need it to open a bank account and register with HMRC.

What To Do After Incorporation

Registering the company is just the beginning. Here's what you need to do in the weeks after incorporation:

Ongoing Obligations: What You Need to Do Each Year

Running a limited company comes with more ongoing admin than being a sole trader. Each year you'll need to:

• File annual accounts with Companies House (usually within 9 months of your financial year end)
• File a Corporation Tax return (CT600) with HMRC (within 12 months of your financial year end)
• Pay any Corporation Tax owed (within 9 months and 1 day of your financial year end)
• File a Confirmation Statement with Companies House (once a year)
• File personal Self Assessment tax returns for any salary or dividends you receive

Most small company owners use an accountant to handle the year-end accounts and Corporation Tax return. The cost varies — typically £800–£2,000 per year for a small company — but a good accountant will more than pay for themselves through tax planning and keeping you on the right side of HMRC.