If you are wondering how to set up a limited company in the UK, you are likely at an important point in your business journey. Whether you are starting from scratch or moving from sole trader to limited company, getting the business setup right is essential.
Setting up a limited company is more than filling in a form online. It involves decisions about ownership, tax, and ongoing responsibilities that can affect your business long after day one.
This guide shows you how to set up a limited company properly, explains what to expect at each stage, and highlights when professional advice can make a real difference.
What Does It Mean to Set Up a Limited Company?
When you set up a limited company in the UK, you are creating a business that is legally separate from you as an individual. The company is registered with Companies House and exists in its own right, which means it can enter into contracts, own assets, and be responsible for its own debts.
One of the main reasons people choose to set up as a limited company is limited liability. In most cases, your personal finances are protected if the business runs into difficulty, as long as you meet your responsibilities as a director.
Setting up a limited company can also make your business appear more established and can offer more flexibility when it comes to tax planning and growth. That said, limited companies do have more ongoing responsibilities than sole traders, including annual accounts, tax returns, and statutory filings. Understanding this from the outset helps you decide whether this structure is right for you.
Step 1: Decide How You Want to Set Up Your Limited Company
Before you start filling in forms, it is important to think about how you want your limited company to be set up. The choices you make at this stage can affect your tax position, your responsibilities, and how easy it is to grow or make changes later.
First, consider whether you are starting a new business or moving an existing business into a limited company. If you are switching from sole trader to limited company, there may be tax and timing considerations to think about before you register.
You will also need to decide whether the company will be run by just you or shared with others. A limited company can have one director and one shareholder, or multiple directors and shareholders. Even if you are starting on your own, it is worth thinking about whether you may want to bring in a business partner or investor in the future.
This is also the point where many people underestimate the importance of getting advice. Decisions about ownership and structure are easy to make at the beginning, but much harder to fix later. Taking the time to plan now can prevent unnecessary complications as your business grows.
Step 2: Choose and Check Your Company Name
Choosing a company name is one of the more visible parts of setting up a limited company, but it also comes with a few rules that need to be followed.
Your company name must be unique and not too similar to an existing registered name. Even small differences in spelling or punctuation may not be enough if the name is considered confusingly similar. You can check name availability on the Companies House register before you apply.
For a private limited company, the name must end with Limited or Ltd. Some words are classed as sensitive, such as those that suggest a connection with the government or certain industries. Using these may require approval or additional evidence.
It is also worth thinking beyond registration. Just because a name is available at Companies House does not mean it is safe to use for trading. Checking existing trademarks and domain availability can help you avoid problems later, especially if you plan to grow or invest in branding.
Taking a bit of extra time at this stage can save you the cost and hassle of changing your company name in the future.
Step 3: Decide on Directors, Shareholders, and Shares
Every limited company must have at least one director and one shareholder. In many small businesses, the same person fills both roles, but they are legally different and come with different responsibilities.
The director is responsible for running the company day to day and making sure it meets its legal and financial obligations. Directors must be over 16 and cannot be disqualified from acting as a director. Even if you are the only person involved, you still have duties to Companies House and HMRC.
The shareholder owns the company. Shareholders hold shares, which represent ownership and usually determine how profits are distributed. When setting up your limited company, you will need to decide how many shares to issue and who will own them.
If you are setting up a limited company with others, this step is especially important. Decisions about share ownership affect control, profit sharing, and what happens if someone wants to leave or invest later. Many problems between business owners start with a share structure that was not properly thought through at the beginning.
Even if you are starting on your own, it is worth considering future plans. Making the right choices now can give you more flexibility as your business grows.
Step 4: Register Your Company with Companies House
Registering your company with Companies House is the step that officially creates your limited company. This process is known as company incorporation.
To set up a limited company in the UK, you will need to provide:
- Your chosen company name
- A registered office address in the UK
- Details of all directors and shareholders
- Information about shares and share capital
- The company’s memorandum and articles of association
Most people choose to set up a limited company online using the Companies House website. This is usually the quickest option and, in many cases, your company can be registered within 24 hours.
How much does it cost to set up a limited company?
The standard Companies House fee to register a company online is £12. Some formation agents charge more if they include additional services, such as registered office addresses or company documentation.
Once your company is registered, you will receive a certificate of incorporation and a unique company number. From this point, your limited company legally exists and can begin trading.
Although it is possible to register a company yourself, mistakes at this stage can cause problems later. Incorrect details, poorly structured shares, or unsuitable articles can all be difficult to fix once the company is live.
Step 5: What Happens After Your Company Is Formed?
Once your limited company is registered, there are several important tasks to complete before and shortly after you start trading. These steps ensure your company is set up correctly for tax and compliance from day one.
You must register your company for Corporation Tax with HMRC within three months of starting to trade. This is a legal requirement, even if your company is not yet making a profit.
You should also open a business bank account in the company’s name. Keeping business and personal finances separate is essential for accurate accounting and compliance.
If you plan to pay yourself or hire staff, you will need to set up PAYE and payroll. Even a single‑director company usually requires payroll to be registered if the director is paid a salary.
You will need to consider VAT registration if your turnover is expected to exceed the VAT threshold, or if voluntary registration makes sense for your business.
This is often the point where business owners realise that setting up a limited company is only the beginning. Getting the tax registrations and systems in place early makes ongoing compliance much easier.
Step 6: Your Ongoing Legal and Accounting Responsibilities
Once your limited company is up and running, there are ongoing responsibilities that you must meet every year. These apply even if your company is small or not yet making a profit.
You are required to prepare and file annual accounts with Companies House. These accounts show the company’s financial position and must be submitted on time to avoid penalties.
Your company must also submit a Corporation Tax return to HMRC and pay any tax due by the relevant deadline. Accurate bookkeeping throughout the year makes this process much smoother.
In addition, you must file a confirmation statement annually to confirm that your company details are up to date. This includes information about directors, shareholders, and the registered office address.
Keeping proper financial records is a legal requirement for limited companies. This includes invoices, receipts, bank statements, and payroll records. Poor record‑keeping is one of the most common reasons businesses run into compliance issues.
These responsibilities are manageable, but they do require organisation and an understanding of deadlines. Many directors choose to work with an accountant to ensure everything is handled correctly and to free up time to focus on running the business.
Can You Set Up a Limited Company Yourself?
Yes, you can set up a limited company yourself, and many people do. The Companies House process is relatively simple, and it is possible to complete the registration online without professional help.
However, setting up a limited company is not just about registering a name. The decisions you make around share structure, director setup, tax registrations, and payroll can have long‑term consequences. These are often the areas where people run into problems later.
Common issues include setting up shares in a way that limits future flexibility, missing tax registrations, or misunderstanding director responsibilities. Fixing these mistakes after the company is formed can be time‑consuming and, in some cases, costly.
Getting advice at the setup stage does not mean giving up control. It means making informed decisions and starting your business on solid foundations. For many business owners, a small amount of professional input early on can prevent much bigger issues down the line.
How Ryans Can Help You Set Up a Limited Company
At Ryans, we help business owners set up limited companies in a way that supports both compliance and long‑term success. Whether you are starting a brand‑new business or moving from sole trader to limited company, we guide you through the process and help you avoid common mistakes.
We can handle the full limited company set up for you, including company registration, director and shareholder structure, and ensuring everything is filed correctly with Companies House. We also take care of registering your company with HMRC and advising on Corporation Tax, VAT, and payroll from day one.
Beyond the initial setup, we support you with ongoing accounting, bookkeeping, and tax planning so your business stays compliant as it grows. Our advice is practical, tailored to your situation, and focused on helping you make informed decisions.
Working with Ryans means you are not just opening a limited company. You are setting up your business with the right foundations in place from the very beginning.
Frequently Asked Questions
How long does it take to set up a limited company in the UK?
If you set up a limited company online through Companies House, it can often be registered within 24 hours. Postal applications take longer. The overall timeline may increase if you need advice on share structure, tax registration, or moving from sole trader to limited company.
How much does it cost to set up a limited company?
The standard Companies House fee to set up a limited company online is £12. If you use a formation agent or accountant, the cost will usually be higher, depending on the level of support provided. While registering a company is inexpensive, it is important to factor in ongoing accounting and compliance costs.
Can I set up a limited company online myself?
Yes, you can set up a limited company online directly through Companies House. The system is designed to be straightforward. However, it does not provide tailored advice on tax efficiency, share structure, or director responsibilities, which is where professional guidance can add real value.
Do I need an accountant to start a limited company?
You are not legally required to use an accountant when starting a limited company. That said, many business owners choose to get advice at the setup stage to ensure their company is structured correctly and registered for the right taxes. An accountant can also help you understand your ongoing responsibilities from the outset.
Can I change from sole trader to limited company later?
Yes, many people start as sole traders and later decide to set up as a limited company. The transition needs to be handled properly to avoid tax or administrative issues. Planning the timing and structure carefully can help make the move smooth and efficient.
What records do I need to keep for a limited company?
Limited companies must keep accurate financial records, including invoices, receipts, bank statements, payroll records, and details of company expenses. These records form the basis of your annual accounts and Corporation Tax return and must be retained for several years.