Setting up a limited company is one of the most popular ways to start a business in the UK. A limited company is a separate legal entity, which means the company — not you personally — is responsible for its own debts, and the business often looks more established to customers, suppliers and lenders.
This guide shows you how to set up a limited company in the UK, step by step, from choosing a name to registering with Companies House and HMRC, and explains the duties that follow once your company is trading.
Step 1: Check Your Company Name
Your company name must be unique. You can check whether a name is available on the Companies House register. Your name must not be the same as, or too similar to, an existing company name, and it must not contain sensitive words unless you have permission to use them. Most company names end with Limited or Ltd.
It is also worth checking that the name works as a website address and trading name, since you will use it on invoices, contracts and your website.
Step 2: Choose Your SIC Code
When you incorporate, you must choose at least one Standard Industrial Classification (SIC) code that describes what your company does — for example, accountancy, building, retail or consultancy. You can choose up to four codes. Pick the ones that best describe your main activities, as they are shown on the public record at Companies House.
Step 3: Set Your Registered Office Address
Every company must have a registered office address in the UK. This is the official address where Companies House and HMRC send legal documents and letters. It can be your home address or your accountant’s office, but remember that it appears on the public record, so many directors use a business address instead.
Step 4: Appoint Directors and Shareholders
A company must have at least one director, who must be aged 16 or over and not disqualified from being a director. Directors run the company day to day. Shareholders own the company, and in a small company the director and shareholder are often the same person.
You also need to decide on share capital — how many shares the company issues and what each is worth. Many small companies start with 100 shares at £1 each, giving £100 of share capital.
Step 5: Record Your People with Significant Control
You must identify your people with significant control (PSC) — anyone who owns more than 25% of the shares or voting rights, can appoint or remove most directors, or otherwise controls the company. Their details are kept on the PSC register and reported to Companies House. This is part of the UK’s company transparency rules.
Step 6: How to Set Up a Limited Company at Companies House
Once you know how to set up a limited company, you can incorporate online, which usually takes less than 24 hours if there are no problems, or by post using form IN01. A fee applies — check the current fee on the Companies House website before you apply, as it changes from time to time. Once your application is accepted, you will receive a certificate of incorporation and a company number.
Step 7: Register for Corporation Tax with HMRC
Within three months of starting to trade, you must tell HMRC that your company is active for corporation tax purposes. HMRC will send your company a Unique Taxpayer Reference (UTR) for corporation tax to your registered office, usually a few weeks after incorporation. You will also need a Government Gateway account for the company so you can file returns and pay tax online.
Once registered, your company’s profits will be taxed under the corporation tax rules, so it is worth understanding them early. Read our guide to corporation tax marginal relief to see how the 19% small profits rate and the 25% main rate work.
Step 8: Open a Business Bank Account
Open a business bank account in the company’s name and keep the company’s money completely separate from your personal money. Mixing the two makes your accounts harder to prepare, confuses your tax position and can weaken the protection that limited liability gives you. Most high street and online banks offer business accounts, and some can be opened as part of the incorporation process.
Your Accounting Reference Date and Filing Duties
Once you know how to set up a limited company and it is running, several deadlines apply:
- Accounting reference date: the end of your company’s financial year, normally 12 months after the date of incorporation (you can change it in most cases).
- Annual accounts to Companies House: due 9 months after your accounting year end (21 months after incorporation for your first accounts).
- Confirmation statement: you must file one at least once every 12 months, confirming that the company’s details are up to date.
- Corporation tax return (form CT600): due to HMRC within 12 months of the end of your accounting period. Your corporation tax must be paid 9 months and 1 day after the end of the accounting period.
Missing these deadlines brings automatic penalties, so put them in your diary from day one. Keeping good records from the start makes every deadline easier — our bookkeeping basics guide explains what to keep and how long to keep it.
How to Pay Yourself as a Director
Directors usually pay themselves through a mix of salary and dividends. Salary is paid through PAYE, and dividends are paid from the company’s profits after corporation tax has been taken into account. Alternatively, a director can take money as a loan, but that must be recorded properly in a director’s loan account — and if the account is overdrawn, tax charges can follow.
Related reading: Our guide to pension contributions through your limited company explains the tax relief and the £60,000 annual allowance.
Frequently Asked Questions
How long does it take to set up a limited company?
Incorporating online is how to set up a limited company in under 24 hours if the application is straightforward. Postal applications take longer.
Can I be the only director and shareholder?
Yes. A company can have a single director and a single shareholder, and they can be the same person, as long as that person is aged 16 or over and not disqualified.
Do I need an accountant straight away?
Not legally, but an accountant can help with corporation tax, annual accounts, payroll and VAT from the start — including how to set up a limited company correctly — and will remind you of the deadlines that carry penalties.
What is a company UTR?
A company UTR is the 10-digit Unique Taxpayer Reference that HMRC issues for corporation tax. You need it to file the company’s tax return and pay corporation tax.
How We Can Help
Knowing how to set up a limited company is only the start — keeping it compliant, filing its accounts and tax returns, and managing how you take money out are the parts that need ongoing care. Financial Accounting Firm helps new and established companies with accounts, corporation tax, payroll and directors’ duties, so you can focus on running your business. Contact us to discuss your new company, or read about our limited company accounting services on our Services page.
This article is general information only and should not be taken as personal tax or financial advice. Tax rules can change, and your position will depend on your own circumstances.
