Setting up a limited company is one of the most important decisions you'll make as a business owner. It creates a legally separate entity — distinct from you personally — which means your personal assets are protected if the business runs into difficulty. In the UK, the process is handled through Companies House, and application and processing times vary.
This guide walks you through every stage: from deciding whether a limited company is the right structure for you, to understanding your obligations at the end of your first trading year.
Why Choose a Limited Company Structure?
The most common alternative to a limited company is operating as a sole trader. Both structures are legitimate and widely used, but they differ significantly in terms of legal protection, tax efficiency, and administrative burden.
| Factor | Sole Trader | Limited Company |
|---|---|---|
| Legal liability | Unlimited — personal assets at risk | Limited to share capital invested |
| Tax on £50k profit | ~£14,500 (Income Tax + NI) | ~£7,800 (salary + dividends) |
| Setup process | Register with HMRC only | Companies House + HMRC registration |
| Professional credibility | Varies by industry | Generally higher, esp. for B2B |
| Raising investment | Very difficult | Straightforward (issue shares) |
| Privacy | No public filing required | Directors listed on public register |
For most people earning above £30,000 per year, a limited company will be more tax efficient. For contractors, consultants, and anyone who wants to protect personal assets from business risk, the limited company structure is almost always the right choice. See our full guide on Limited Company vs Sole Trader for a detailed breakdown.
What You Need Before You Start
Before you begin the Companies House application, gather the following information. Having it ready will make the process smooth and fast.
Company Name
Must be unique on the Companies House register, must end in "Limited" or "Ltd", and must not contain restricted words without approval. Check availability using the free Companies House name search.
Registered Office Address
A UK address where official correspondence will be sent. Must be in the same jurisdiction as where you register (England & Wales, Scotland, or Northern Ireland). Can be a professional service address — not necessarily your home.
Director Details
Full name, date of birth, nationality, occupation, residential address, and a service address. All UK companies must have at least one director aged 16 or over.
Shareholder Details
Name and address of each shareholder (called members). For a simple owner-managed business, this is often the same person as the director.
Share Structure
How many shares to issue and at what nominal value. A simple structure is 100 ordinary shares at £1 each. This can be changed later but requires more administration.
SIC Code
A Standard Industrial Classification code that describes your business activities. You can choose up to four. Use the Companies House SIC code list to find the most appropriate one.
The 6-Step Registration Process
Once you have all the information above, registration is straightforward. Here are the six steps to forming your company.
Choose your formation method
You can register directly with Companies House (£50 online), through a formation agent, or through a service like Sterling Formations, which partners with Tide to let you form your company at no cost when you open a business bank account. For most people, the formation agent route is faster and more guided.
Complete the IN01 application
This is the official Companies House application form. It captures your company name, registered office, director details, shareholder details, share structure, and SIC code. When using an online formation service, you fill in a simple form and the agent submits IN01 on your behalf.
Choose your Memorandum & Articles of Association
The Memorandum of Association is a statement signed by all subscribers confirming they want to form the company. The Articles of Association are the internal rules governing how the company is run. Most companies adopt the standard "Model Articles" provided by Companies House, which is perfectly suitable for the vast majority of small businesses.
Submit and pay the fee
Check the current Companies House registration fee for your chosen submission route. Electronic submissions are reviewed by Companies House, with processing times that vary. Any partner offer is subject to Tide’s current terms and eligibility.
Receive your Certificate of Incorporation
Once approved, Companies House issues a Certificate of Incorporation. This document confirms your company legally exists and includes your company registration number (CRN) and the date of incorporation. It is sent electronically and is legally valid in digital form.
Open a business bank account
Your company is a separate legal entity and should keep business and personal finances distinct. You can review Tide or other providers during formation, but account approval and any offer are subject to the provider’s current terms.
Post-Registration: HMRC Registrations
Registering with Companies House creates your company legally, but you also need to register with HMRC for tax purposes. Here's what applies and when.
Corporation Tax — Required for all companies
You must register your company with HMRC for Corporation Tax within 3 months of starting to trade. HMRC will usually send a letter to your registered office shortly after incorporation with instructions. Your company will pay Corporation Tax on all taxable profits at 19% (small profits rate for profits up to £50,000, or 25% for profits above £250,000 from April 2023).
PAYE — Required if paying a salary
If you plan to pay yourself or any employees a salary above the Lower Earnings Limit (currently £6,396 per year), you'll need to set up PAYE (Pay As You Earn) through HMRC. This allows you to run payroll and report to HMRC in real time (Real Time Information, or RTI).
VAT — Required if turnover will exceed £90,000
If your annual taxable turnover will exceed £90,000, VAT registration is mandatory. You can also register voluntarily below this threshold, which may be beneficial if you have significant VAT-able costs. Once registered, you must charge VAT on your invoices and file quarterly VAT returns.
Your First Year Obligations
Once your company is up and running, you'll have a set of annual obligations that must be met. Missing these can result in penalties or even the company being struck off the register.
Confirmation Statement
Filed at least annually (within 12 months of incorporation, then every 12 months). Confirms your company details are correct on the Companies House register. Cost: £34 online.
Annual Accounts
Statutory accounts must be filed with Companies House within 9 months of your accounting reference date (your year-end). For micro-entities, simplified accounts can be filed. Late filing results in automatic penalties starting at £150.
Corporation Tax Return (CT600)
Filed with HMRC within 12 months of your accounting year-end. The tax itself is payable within 9 months and 1 day of your year-end. Most small companies use an accountant for this.
PSC Register
You must maintain a register of People with Significant Control (anyone owning 25%+ of shares or voting rights, or otherwise exercising significant influence). This is publicly visible on Companies House.
Related Resources
Ready to form your company?
Register your UK limited company today — the Companies House filing fee (£50) is reimbursed when you open a Tide business account. Eligibility criteria apply.
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