What is company formation in the UK?
Company formation — also known as company incorporation or company registration — is the legal process of establishing a new business entity at Companies House, the UK's official register of companies. Once formed, your company becomes a distinct legal person: it can own assets, enter contracts, employ staff, and trade in its own name.
The most common structure for new UK businesses is a private limited company (Ltd). Limited companies offer significant advantages over operating as a sole trader, including limited liability protection, lower tax rates through Corporation Tax, and greater credibility with customers, suppliers, and lenders.
Sterling Formations is building a clearer way to understand and prepare for UK company formation. This guide explains the official process so you can make informed decisions about your company, registered office, directors, shareholders, and next steps.
Why form a limited company in the UK?
- Limited liability — personal assets are protected
- Lower tax rates than self-employment (19–25% Corporation Tax)
- Greater credibility with clients and suppliers
- Easier to raise investment and bring in partners
- Separate legal identity — the company owns assets, not you
- Access to more business banking products and credit
How UK company formation works
The application can be completed online, with the time required depending on your company details and the information you need to provide. Here is what happens at each stage:
1. Choose your company name
Pick a unique name that ends in "Limited" or "Ltd". Companies House checks availability during the registration process.
2. Provide director & shareholder details
Enter the details of all directors (aged 18+) and shareholders. One person can serve as both.
3. Select your registered office
A UK address is required. This is the official address for legal correspondence.
4. Plan your business banking
Choose a business bank account and keep company finances separate from personal finances from the start.
5. Receive your Certificate
Your application is filed electronically with Companies House. Your Certificate of Incorporation arrives after Companies House accepts the application.
What you receive after formation
Once Companies House approves your application, you will receive the following documents electronically:
- Certificate of Incorporation — confirming your company's legal existence and unique Company Registration Number (CRN)
- Memorandum of Association — the founding document signed by initial shareholders
- Articles of Association — the rules governing how the company is run
- Share Certificates — for all initial shareholders
Your company is then legally registered in the UK. You should register with HMRC for Corporation Tax within 3 months of starting to trade, and consider whether VAT registration applies to your business.
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Frequently asked questions
What is company formation in the UK?
Company formation (also called company registration or incorporation) is the legal process of creating a new company at Companies House, the UK government's official registrar of companies. Once formed, your company becomes a separate legal entity, distinct from its owners.
How much does UK company formation cost?
Companies House charges a fee for online incorporation, and the amount can change. Check the current fee on GOV.UK before you apply. Sterling Formations will show any service costs clearly before you proceed.
How long does UK company formation take?
Companies House processing times vary and are not guaranteed. Electronic filing can be faster than postal filing, but the certificate is issued only after Companies House accepts the application.
What do I need to form a UK company?
You need a company name, a registered office address in the UK, at least one director (aged 18+), and details of shareholders and share structure. You also need a Standard Industrial Classification (SIC) code that describes your business activity.
Can I form a UK company if I live abroad?
Non-UK residents can be directors and shareholders of a UK limited company. However, the company must have an appropriate registered office address in the UK and may need to meet identity and verification requirements.