How to Set Up a Limited Company

Setting up a limited company is a popular choice for business owners who want to trade with a more professional structure, protect their personal assets and potentially benefit from certain tax efficiencies. The process is fairly straightforward, but it involves more responsibilities than operating as a sole trader. If you are thinking of registering a company, it is important to understand what is involved and what decisions you will need to make along the way.

This guide walks you through the steps required to set up a private limited company in the UK, from choosing a name to registering with Companies House.

Decide if a limited company is right for you

Before you start, think about whether forming a limited company is the right move for your business. A limited company is a legal entity in its own right, separate from its owners. This means your personal finances are protected if the business runs into trouble, but it also means you will have to follow specific rules and submit regular filings to Companies House and HMRC.

If you plan to grow, take on employees, raise investment or build a professional brand, a limited company can be a strong foundation. On the other hand, if you are freelancing on a small scale or just starting out, it may be simpler to begin as a sole trader.

Choose a name for your company

Your company name must be unique and must not be too similar to another company already on the Companies House register. It must end in “Limited” or “Ltd” unless you are setting up a charitable company that meets the conditions for exemption.

You can check name availability on the Companies House website before submitting your application. Avoid names that are offensive, misleading or include sensitive words such as “Bank” or “Royal” without permission.

Prepare the required information

To register a limited company, you will need to provide the following:

• A UK registered office address. This will be publicly visible and must be a physical address, not a PO Box.

• At least one director, who must be aged 16 or over.

• At least one shareholder. This can be the same person as the director.

• A description of your company’s business activity, using a SIC (Standard Industrial Classification) code.

• A memorandum and articles of association. You can use the model articles provided by Companies House or create your own.

• Details of shares issued and shareholder rights.

You will also need to decide whether to use standard or bespoke share structures and whether any other individuals or companies have significant control over the business.

Register the company with Companies House

Once you have gathered all the required details, you can register your company online at GOV.UK. As of 2025, the fee is £50 for online registration. Most applications are approved within 24 hours, and you will receive a certificate of incorporation once the company is officially formed.

If you prefer to register by post, you can use Form IN01, but this process is slower and costs £71.

Alternatively, you can use a company formation agent who can handle the paperwork and offer extras like registered office services or assistance with opening a business bank account.

Register for Corporation Tax

After your company is incorporated, you must register with HMRC for Corporation Tax within three months of starting business activity. HMRC will send you a Unique Taxpayer Reference (UTR) shortly after your company is formed.

If you expect to pay yourself a salary, hire staff or exceed the VAT threshold, you may also need to register for PAYE and VAT.

Open a business bank account

You will need a separate bank account in the name of the company. Most UK banks offer dedicated business accounts, often with 12 to 24 months of free banking for new companies. You will usually need to provide your certificate of incorporation, your company number and proof of ID for all directors.

Keeping business and personal finances separate is important for good record-keeping and will help with your end-of-year accounts.

Set up your accounting and bookkeeping

From day one, you must keep accurate financial records, including all income, expenses, invoices, receipts and payroll if applicable. You will need to file annual accounts with Companies House and a Company Tax Return with HMRC.

Many businesses choose to use cloud accounting software like Xero, FreeAgent or QuickBooks to manage their finances. You may also want to work with an accountant to ensure you meet all filing deadlines and stay compliant.

Final thoughts

Setting up a limited company in the UK is simple, but it comes with responsibilities. You will need to stay on top of your accounts, submit regular filings and follow rules set by Companies House and HMRC. The benefits, however, can be significant, especially if you want to grow your business, build credibility or limit your personal financial risk.

By preparing properly, using the right tools and getting professional support where needed, you can build your company on strong foundations and start trading with confidence.