Starting a limited company can be an important step towards building a more established and structured business. It gives the business its own legal identity, separates company finances from personal finances and may make it easier to work with larger clients, suppliers and investors.
However, registering a company is only the beginning. Company directors must keep accurate financial records, submit information to Companies House, manage business taxes and ensure that the company follows UK law.
This guide explains how to start a limited company in the UK, including the decisions you need to make before registering, the current Companies House requirements and the responsibilities that begin after incorporation.
The information in this guide was updated in August 2026.
Understand the Structure
A limited company is a legal entity with an identity that is separate from the people who own or manage it. This means the company can receive income, sign contracts, employ people, own assets and owe money in its own name.
Most small businesses are formed as private companies limited by shares. These companies are owned by shareholders and managed by directors.
Shareholders generally have limited liability. Their financial responsibility is normally limited to the amount invested in, or owed on, their shares. However, directors may still become personally responsible in certain situations, such as when they provide personal guarantees or breach their legal duties.
A limited company should not be treated as an extension of its owner’s personal finances. Money earned by the company belongs to the company until it is withdrawn through an appropriate method, such as salary, dividends, expense reimbursement or a director’s loan.
Check It Is Right
Before setting up a limited company, compare it with operating as a sole trader.
A sole trader structure is generally simpler to establish and manage. The owner receives the business income directly and reports profits through Self Assessment. However, there is no legal separation between the owner and the business.
A limited company provides greater separation, but it also creates additional responsibilities. Directors must maintain company records, prepare accounts, submit tax returns, file confirmation statements and report certain changes.
Forming a company may be suitable when you want to:
- Create a separate legal business
- Work with clients that prefer limited companies
- Share ownership with another person
- Bring investors into the business
- Build a business that can continue without its original owner
- Retain some profits within the company
- Create a more formal commercial identity
The best structure depends on expected profits, risk, administrative costs, personal income and future plans. Tax savings should not be the only reason for incorporating because tax rates and personal circumstances can change.
Choose the Company Type
The majority of commercial businesses register as companies limited by shares.
A company limited by shares has shareholders who own part or all of the business. Their rights are connected to the number and type of shares they hold.
A company limited by guarantee does not normally have shareholders. Instead, it has guarantors who agree to contribute a stated amount if the company is closed. This structure is often used by associations, clubs, membership organisations and some not-for-profit bodies.
Other structures, including community interest companies, public limited companies and limited liability partnerships, have different rules.
For most freelancers, consultants, contractors, retailers, agencies and online businesses, a private company limited by shares is the usual choice.
Choose the Directors
Every private limited company must have at least one director. The director must be aged 16 or over and must not be disqualified from acting as a company director.
Directors do not have to live in the UK, but the company must have a registered office address in the appropriate UK jurisdiction. A private limited company is not legally required to appoint a company secretary.
A director is legally responsible for helping to run the company. Responsibilities include ensuring that records are maintained, accounts are prepared and required information is submitted on time.
Directors must also follow the company’s articles of association, act in the company’s best interests, use reasonable care and disclose potential conflicts of interest.
Hiring an accountant does not remove these responsibilities. An accountant can prepare and submit documents, but the directors remain legally responsible for the company.
Decide the Ownership
A company limited by shares must have at least one shareholder. The shareholder can also be the company’s only director.
When there is one shareholder, that person can own 100% of the company. There is no maximum number of shareholders.
Many small companies begin by issuing one or more ordinary shares. For example, a single owner might hold one ordinary share worth £1.
A business with several founders needs more careful planning. The owners should agree:
- How many shares each person receives
- Which voting rights apply
- How profits may be distributed
- What decisions require shareholder approval
- What happens when a shareholder leaves
- Whether shares can be sold to another person
- How disagreements will be resolved
Share ownership affects control, voting power and entitlement to dividends. It should not be divided casually.
A shareholders’ agreement may be useful when two or more people own the company. This private agreement can set out management rules, responsibilities and procedures for future disputes.
Identify the PSCs
You must identify the company’s people with significant control, commonly known as PSCs.
A PSC will often be someone who owns more than 25% of the shares or voting rights. A person may also qualify if they can appoint or remove most directors or otherwise exercise significant influence over the company.
For a company with one owner who is also the only director, that person will normally be the PSC.
PSC information is recorded at Companies House. It must remain accurate, and relevant changes must be reported.
Companies should not use informal ownership arrangements to hide the person who ultimately owns or controls the business.
Select a Name
Your company needs a registered name that follows Companies House rules.
A private company name will normally end in “Limited” or “Ltd”. Certain words require approval, particularly words that suggest government backing, official authority, regulated expertise or a particular professional status.
The name must not be the same as another registered company name. A name that is very similar to an existing company or protected trade mark can also cause problems.
Before registering, check:
- The Companies House register
- The UK trade mark database
- Relevant website domain names
- Social-media usernames
- Similar businesses operating in your market
Companies House registration does not automatically provide trade mark protection. A company name may be available at Companies House but still conflict with an existing brand.
You can use a separate trading name, but the company’s registered details must appear on official documents, invoices and business communications where required.
Arrange the Address
A company must provide a registered office address when it is formed.
The address must be a physical address in the UK and must be located in the same jurisdiction in which the company is registered. For example, a company registered in Scotland must have a Scottish registered office.
It must also be an appropriate address where company post will reach someone connected with the business and where delivery can be acknowledged. A standalone PO Box cannot be used.
The registered office address is displayed publicly on the Companies House register. Business owners who do not want their home address published can use an accountant, solicitor or registered-office provider, provided they have permission.
A registered email address must also be supplied. Companies House may use it to contact the business, but it is not published on the public register.
Choose an email account that is checked regularly. Important company notices should not depend on an inbox that only one person can access.
Verify Your Identity
Identity verification is now an important part of limited company formation in the UK.
Identity verification became a legal requirement from 18 November 2025, with requirements being introduced through a transition process for directors and PSCs.
When registering a new company, you will be asked for the Companies House personal code of each director. Directors can usually verify their identity through GOV.UK One Login or through an Authorised Corporate Service Provider, such as an authorised accountant, solicitor or formation agent.
PSCs must also verify their identities and provide their personal codes within the period that applies to them.
Someone who is both a director and a PSC may have to connect their verified identity separately to each role.
Complete identity verification before starting the incorporation form. This can reduce delays, particularly when the company has several directors.
Prepare the Documents
A company needs formal documents explaining how it will be established and managed.
The memorandum of association is a legal statement in which the initial shareholders or guarantors agree to form the company.
The articles of association contain the rules for managing the company. Many straightforward companies use the standard model articles provided under company law.
A company limited by shares must also provide a statement of capital. This describes the shares issued by the company and the rights attached to them.
The online Companies House service can create standard documents during registration.
Bespoke documents may be necessary when the company has several share classes, outside investors, special voting rights or restrictions on share transfers. Legal advice may be appropriate in these situations.
Choose a SIC Code
A Standard Industrial Classification code, known as a SIC code, identifies the type of business activity carried out by the company.
You must choose at least one suitable SIC code during registration. A company with more than one genuine business activity may use several codes.
Choose a code that accurately describes the company’s main work. Do not add unrelated codes simply because the company might provide those services in the future.
The SIC code is an administrative classification. It does not replace any professional licence, sector registration or local authority permission the business may need.
Register the Company
The simplest way to register a limited company is through the official Companies House online service.
The online incorporation fee is £100 as of August 2026. The paper application fee is £124. The current fees came into effect on 1 February 2026.
During the application, you will normally provide:
- The company name
- The registered office address
- The registered email address
- Director information
- Shareholder information
- PSC details
- Share and capital information
- The SIC code
- Identity-verification details
- The company’s articles of association
- Confirmation that the company is being formed for a lawful purpose
Straightforward online applications are often processed quickly, although an application can take longer when information needs to be reviewed.
After approval, Companies House issues a certificate of incorporation. It confirms the company’s legal name, registration number and incorporation date.
Keep the certificate and registration records securely. You may need them when opening a business bank account, applying for finance, registering with service providers or entering commercial contracts.
Open a Bank Account
Open a dedicated business bank account once the company has been incorporated.
Because the company is legally separate from its owners, its finances should be kept separate from personal finances.
Customer payments should be received into the company account, while company expenses, salaries, taxes and supplier bills should normally be paid from that account.
When a director pays a company expense personally, the payment should be recorded correctly. When a director introduces or withdraws money, it may need to be recorded through a director’s loan account.
Avoid using the company account for personal purchases. Unexplained withdrawals can create bookkeeping problems and may lead to unexpected tax consequences.
Banks carry out their own identity, residency and risk checks. Companies House registration does not guarantee that a bank will approve an account application.
Register for Tax
A company that begins trading or receiving income generally becomes active for Corporation Tax purposes.
HMRC must normally be informed within three months of the beginning of the company’s Corporation Tax accounting period.
The company will receive a Unique Taxpayer Reference, usually called a UTR. This reference is used when managing Corporation Tax and communicating with HMRC.
For the 2026 financial year, the Corporation Tax small-profits rate is 19% for qualifying companies with profits of £50,000 or less. The main rate is 25% for profits above £250,000.
Marginal Relief may apply when profits are between £50,000 and £250,000. These thresholds can be adjusted when a company has associated companies or an accounting period shorter than 12 months.
Corporation Tax is charged on taxable profit rather than turnover. Taxable profit may differ from the amount of cash in the company’s bank account.
Set aside money for Corporation Tax throughout the year instead of waiting until the payment deadline.
Consider VAT
VAT registration is not automatically required when a limited company is formed.
A business must normally register when its VAT-taxable turnover for the previous 12 months exceeds £90,000. Registration may also be required when the business expects to exceed £90,000 within the next 30 days.
Companies below the threshold can apply for voluntary VAT registration.
Voluntary registration may be helpful when most customers are VAT-registered businesses and the company has significant VAT-bearing costs. It may be less attractive when customers are members of the public who cannot recover VAT.
VAT affects prices, invoices, bookkeeping and cash flow. Consider the commercial effect before registering voluntarily.
Set Up Payroll
Register the company as an employer when it needs to operate PAYE.
Registration may be required even when the company only employs its sole director.
Payroll software is used to calculate salaries, Income Tax, National Insurance contributions and other deductions. Most payroll information must be reported to HMRC on or before the employee’s payday.
Do not withdraw money and describe it as salary after the event. Salary payments should be processed and recorded through payroll when PAYE rules apply.
The company may also have workplace pension duties if it employs eligible staff.
Pay Yourself Correctly
Company money can be paid to a director or shareholder in several ways, including:
- Salary
- Dividends
- Reimbursement of business expenses
- Pension contributions
- Repayment of money previously lent to the company
- Director’s loan payments
Each method has different legal, accounting and tax consequences.
Dividends can only be paid from sufficient distributable profits. The company should prepare the appropriate records and dividend vouchers.
A positive bank balance does not automatically mean that the company has enough profit to pay a lawful dividend.
Directors should not copy another business owner’s salary and dividend arrangement without considering their own circumstances. The correct approach can depend on other income, National Insurance, student loans, pensions and the company’s available profits.
Keep Good Records
Companies must keep accurate company and accounting records.
Financial records should include money received, money spent, bank statements, sales invoices, purchase invoices, receipts, contracts and supporting calculations.
HMRC generally requires company accounting records to be kept for at least six years from the end of the financial year to which they relate, although some records may need to be retained for longer.
Use bookkeeping software from the beginning. This makes it easier to monitor income, expenses, unpaid invoices, VAT and estimated tax liabilities.
A simple monthly routine should include reconciling the bank account, uploading receipts, reviewing unpaid invoices and checking the amount reserved for tax.
Good records are much easier to maintain than reconstruct at the end of the year.
Know the Deadlines
A new private company will normally have to file its first accounts with Companies House within 21 months of incorporation.
After the first accounts, annual accounts are usually due nine months after the company’s financial year ends.
Corporation Tax is normally payable nine months and one day after the Corporation Tax accounting period ends. The Company Tax Return is generally due 12 months after the accounting period ends.
The company must also submit a confirmation statement at least once every 12 months. The online confirmation statement fee is £50 as of August 2026, and the statement can be filed up to 14 days after the end of the review period.
Annual accounts, the Company Tax Return and the confirmation statement are separate responsibilities. Filing one does not complete the others.
Create a compliance calendar as soon as the company is formed. Do not depend entirely on email reminders.
Check Other Duties
Depending on its activities, the company may need licences, professional registrations, insurance or local authority permission.
A company that employs staff may need Employers’ Liability insurance, payroll procedures, employment contracts and workplace pension arrangements.
A business that collects or processes personal information should also check its responsibilities under UK data-protection law.
Organisations that use personal information may have to pay a data-protection fee unless an exemption applies. The Information Commissioner’s Office provides an online self-assessment to help businesses decide whether payment is required.
Websites may also require privacy notices, cookie information, company details and suitable sales terms.
These obligations depend on what the company actually does, not simply on the fact that it has been registered.
Avoid Common Mistakes
One common mistake is registering a company without understanding the ongoing costs and deadlines.
Another is using a home address without realising that the registered office will be publicly visible.
Business owners also create problems by mixing company and personal money, paying unsupported dividends or failing to record director’s loan transactions.
Other frequent mistakes include:
- Dividing shares without discussing future control
- Choosing an inaccurate SIC code
- Missing identity-verification requirements
- Ignoring Companies House post
- Failing to register for VAT at the correct time
- Assuming an accountant is responsible for every deadline
- Forgetting to file a confirmation statement
- Taking money from the company without recording it properly
Good planning at the beginning can prevent expensive corrections later.
Final Checklist
Before completing your Companies House registration, confirm that you have:
- Chosen the correct company structure
- Selected an available company name
- Appointed at least one eligible director
- Decided who will own the shares
- Identified all PSCs
- Agreed the share structure
- Arranged a compliant registered office
- Created a suitable registered email address
- Completed identity verification
- Chosen the correct SIC code
- Prepared the company documents
- Budgeted for registration and professional costs
After incorporation, open the company bank account, establish bookkeeping, register for relevant taxes, arrange payroll where required and record every filing deadline.
The registration form may be completed quickly, but the systems built around the company will determine how smoothly it operates.
FAQs
How much does it cost to start a limited company in the UK?
The official Companies House online incorporation fee is £100 as of August 2026. Other possible costs include accounting services, legal advice, registered-office services, insurance, software, banking and industry licences.
Can I start a limited company by myself?
Yes. One person can be the only director and the only shareholder of a private company limited by shares. The company must still have a registered office, registered email address, suitable documents and accurate PSC information.
Do I need an accountant to register a limited company?
No. An accountant is not legally required to complete a straightforward Companies House registration.
However, professional advice can be helpful when there are several shareholders, different share classes, overseas owners, substantial investments or complicated tax arrangements.
How long does it take to register a limited company?
Straightforward online applications are often processed within approximately 24 hours, but registration can take longer if Companies House needs to check the information or supporting documents.
The company does not legally exist until Companies House approves the application and issues the certificate of incorporation.
Can I use my home address for a limited company?
Yes, provided it meets the registered-office requirements and is located in the correct UK jurisdiction.
However, the registered office will be shown publicly. Anyone concerned about privacy should arrange an accountant’s address, solicitor’s address or suitable registered-office service before submitting the application.
Disclaimer: This article provides general information and does not constitute legal, accounting or tax advice. Business owners should obtain professional advice based on their individual circumstances.
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