How to start a limited company in the UK

Is a limited company right for you?

A private limited company is a separate legal entity from its owners. That usually means the company’s debts belong to the company, and shareholders’ liability is limited to what they invested. In return, companies have more admin: annual accounts, a confirmation statement, Corporation Tax returns and public records on the Companies House register. Many people start as sole traders and incorporate later; an accountant can help you compare the two for your situation.

Step 1: Choose a company name

Your name must be unique on the Companies House register and must usually end in “Limited” or “Ltd”. Some words are sensitive and need permission. Use the Companies House name availability checker on GOV.UK, and check trade marks and domain names before committing.

Step 2: Directors, shareholders and PSCs

A private limited company needs at least one director, who must be at least 16. Directors have legal responsibilities, set out on GOV.UK. You also need at least one shareholder (who can be the same person) and must identify any people with significant control (PSCs). Companies House has introduced identity verification requirements for directors and PSCs — check the latest rules on GOV.UK.

Step 3: Registered office and SIC code

You need a registered office address in the UK, in the same part of the UK where the company is registered (England and Wales, Scotland, or Northern Ireland). It will be on the public register. You will also choose a Standard Industrial Classification (SIC) code describing what your company does.

Step 4: Register with Companies House

You can register online via GOV.UK. You will provide the company name, address, directors, shareholders, PSCs and articles of association (most people use the standard model articles). There is a registration fee — check the current amount on GOV.UK. You can also register through an accountant or formation agent.

Step 5: Tax registrations

After incorporation you must register for Corporation Tax with HMRC within three months of starting to do business. If you will employ anyone — including yourself as a director drawing a salary — you may need to register as an employer for PAYE. You must register for VAT if taxable turnover exceeds the VAT threshold, and can register voluntarily below it. Check current thresholds on GOV.UK.

Step 6: Bank account and bookkeeping

Open a business bank account so company money stays separate from personal money. Set up accounting software that suits a limited company — FreeAgent, Xero, QuickBooks and Sage all support UK companies — and keep digital records from day one. Use our free invoice generator for your first invoices.

Payroll and employees

If you employ staff, you need to run payroll correctly and report to your tax authority on time. Some accounting packages include payroll; others offer it as an add-on or integrate with specialist payroll software. Payroll rules differ significantly between the UK, US, Canada and Australia, so check that any product supports payroll in your country and region before you buy.

Paying yourself as a director

Directors of small companies commonly pay themselves through a combination of salary (via PAYE payroll) and dividends from profits after Corporation Tax. Dividends can only be paid from available profits, and each method has different tax and National Insurance consequences that change with government policy. Check current rates on GOV.UK and take advice from an accountant before deciding how to pay yourself.

Using a formation agent or accountant

You can register directly with Companies House, but many people use a formation agent or accountant, who may bundle services such as a registered office address, company secretary support or VAT registration. Compare what is included and whether you need it; registering yourself is straightforward if your setup is simple.

Ongoing obligations

• Annual accounts filed with Companies House and HMRC.
• Corporation Tax return and payment by the deadlines.
• Confirmation statement at least once every 12 months.
• Keeping statutory registers and records up to date.
• Payroll reporting if you run PAYE, and VAT returns if registered.

Frequently asked questions