If you are ready to move beyond “just an idea” and start a proper business, learning how to set up a limited company in the UK is a big step. This beginner’s guide walks through the process in plain English, explains the key legal requirements, and highlights where professional advice can save you time, taxes, and stress.

Questions around Corporation Tax, share structure and director responsibilities are common topics discussed by Northampton accountants when helping startups understand limited company requirements.

At 10CA, we help clients at every stage of their business journey, from the first Companies House registration to annual accounts, company tax returns and long-term planning. What follows is a clear, step-by-step guide, but it is not a substitute for tailored advice on your specific circumstances.

1. Decide if a limited company is right for you

Before you look at forms and SIC codes, you need to decide whether a limited company is the right business structure.

A private limited company is a separate legal entity. It can own assets, sign contracts, employ staff and incur company debts in its name. As a shareholder, you benefit from limited liability, which broadly means you are not personally responsible for the company’s debts beyond the value of your shares, provided you have not given personal guarantees or behaved improperly. By contrast, a sole trader has unlimited liability and is personally responsible for business debts.

Limited companies can be more tax efficient in some situations, especially once profits rise above a certain level, but they also bring more paperwork, more formal record-keeping and clearer legal responsibilities for each company director. There is no single “best” structure; it depends on your income, risk level, plans and personal finances.

If you are not sure whether to remain a sole trader or incorporate, it is sensible to take professional advice before you commit.

2. Choose a company name and check if it is available

Every limited company needs a unique company name. The name must not be too similar to an existing company on the Companies House register, and, unless you use an approved exemption, it must end in “Limited” or “Ltd.” Companies House also restricts certain sensitive words and expressions, for example, anything implying a connection with government, public bodies, or regulated professions, unless you have permission.

You can search existing names using the Companies House online service before you submit anything. If you are trading under a particular brand, you should also consider whether a matching domain name is available and whether you need to protect the brand through a trademark.

For most small businesses, there is no need to think about becoming a public limited company at this stage. You will be registering a private limited company limited by shares.

3. Decide on directors, shareholders and business structure

To register, you need at least one director and at least one shareholder; these can be the same person, so it is possible to be the only director and sole shareholder. There is no legal requirement for a company secretary in most small private companies, though some businesses still choose to appoint one to help with administrative responsibilities.

Directors are legally responsible for running the company and making sure it meets its legal obligations, including Companies House filings and tax. Shareholders own the company. Even if you are currently the sole employee, you must be clear which hat you are wearing at any given time: director, shareholder or employee.

When you set up, you will decide how many shares to issue, what nominal value they will have and who holds them. This matters later when you take profits out of the company, because dividends are paid to shareholders according to shareholdings, and salary is paid to employees through PAYE with National Insurance. Recent UK tax changes have increased dividend tax rates by two percentage points from April 2026, so optimal planning around salary and dividends is increasingly important.

If you are setting up with co-founders or family members, it is wise to document arrangements properly in a shareholders’ agreement as well as the basic incorporation documents.

4. Choose your registered office address and SIC code

Every limited company must have a registered office address. This is the official address where Companies House and HMRC send legal documents. It must be a real physical address in the same country in which the company is registered, not just a PO box. For example, a company registered in England and Wales must have its registered office in England or Wales.

You can use your home address, but remember it will appear on the public register. Many owners prefer to use their accountant’s address or a formation agent’s registered office service for privacy.

When you register, you must also provide at least one Standard Industrial Classification (SIC) code that describes your main business activities. Companies House uses a condensed list of SIC codes are based on the official UK Standard Industrial Classification. You can look these up online and choose the closest match; you can update the codes later if your business activities change.

5. Gather the information you need to register

To register with Companies House, you will need personal details for each director and shareholder. This normally includes full name, date of birth, nationality, occupation, home address, a service address (which can be different from your home address), and identification details such as a passport number or other ID for anti-fraud checks.

You will also confirm your share structure, your chosen accounting reference date and your articles of association. You can use the model articles provided by Companies House or adopt bespoke articles if you have more complex needs. These documents are legal documents that govern how the company operates.

From 2024 onwards, changes under the Economic Crime and Corporate Transparency Act mean that Companies House has greater powers to query and reject suspicious information and will gradually require identity verification for directors and persons with significant control. Identity checks are being phased in and are expected to become compulsory by 2026, so it is worth understanding this process early.

6. Register your company with Companies House

You can register a new company online directly with Companies House or through a company formation agent. Online registration is usually the quickest and most cost-effective way to set up. Postal applications are still possible but take longer and cost more.

Using a formation agent can be helpful if you want additional services such as a registered office address, help with SIC codes, or pre-completed legal document templates. Whether you go directly or via an agent, the core information is largely the same.

Once Companies House accepts your application, your company legally exists. You will receive a certificate of incorporation with your company number. At that point you have a separate legal entity, distinct from you personally, with its own legal obligations.

7. Register for Corporation Tax and understand your tax position

As soon as the company starts trading, you must tell HMRC that the company is active for corporation tax. The usual rule is that you must register within three months of starting to trade, which includes making sales, advertising, employing someone or taking other commercial steps.

For the financial year 2025, corporation tax is charged at a main rate of 25 per cent on profits above £250,000 and a small profits rate of 19 per cent on profits of £50,000 or less. Profits between those limits benefit from marginal relief, which gradually increases the effective rate. These rates are confirmed in recent Finance Act provisions and are scheduled to remain in place for 2025–26.

You will normally:

• Prepare annual accounts for the company
• Submit a company tax return to HMRC
• Pay Corporation Tax due on time

This is separate from your own income tax position as a director or shareholder. You may still need to file a self-assessment tax return for salary, dividends or other income, and you will need a National Insurance number to deal with HMRC in your personal capacity.

8. Open a business bank account and separate your finances

Although it is not strictly illegal to use a personal bank account, in practice, a limited company should always have its own business bank account. The company is a separate legal entity, and its business finances should be kept separate from your personal finances.

A dedicated business account makes it much easier to manage record keeping, track tax, monitor cash flow and demonstrate that you are treating the company properly as a separate legal entity. Many banks will ask for your certificate of incorporation, company number, details of directors and shareholders, and ID such as a passport.

If you use accounting software, linking it to your business account can save a lot of administrative time and help you keep on top of your responsibilities throughout the year.

9. Learn your ongoing legal responsibilities

Setting up a limited company is only the beginning. Running one brings continuing legal responsibilities. Key points include:

You must file annual accounts with Companies House. These show the company’s financial position and must comply with UK accounting and filing rules.

You must file at least one confirmation statement every 12 months, confirming that core company information such as the registered office address, directors, shareholders and SIC codes is up to date. Recent changes mean that companies must provide a registered email address and, in most cases, a full list of shareholders the first time they file a confirmation statement under the new rules.

You must keep statutory registers and adequate records of income, expenses, assets, liabilities and decisions. Good record keeping is not just best practice; it is part of your legal obligations as a director.

You must comply with other regulatory requirements relevant to your business activities, for example, VAT registration if your turnover exceeds the threshold, PAYE registration if you have employees, and any industry-specific licences.

If you fail to meet filing deadlines or pay tax, penalties can apply and, in serious cases, directors can face personal consequences. Limited liability does not protect you from sanctions if you ignore your legal responsibilities.

10. When to use a company formation agent or accountant

You can handle the basics of setting up a limited company yourself, but there are times when bringing in professional advice is a better option, especially if:

• you expect rapid growth or complex profit extraction
• you have multiple directors or shareholders
• you are investing significant personal funds and want to manage risk and tax efficiently

An accountant or specialist formation agent can guide you through choices such as share structure, director remuneration, use of a home address versus a professional registered office, and how to balance salary and dividends in light of current tax rules.

They can also help you plan your first year so that annual accounts, company tax returns and confirmation statements are straightforward rather than rushed.

At 10CA we often see clients after they have already formed a company but without a clear plan for tax, record keeping or regulatory requirements. In most cases, it is more efficient to get things right at the beginning than to fix avoidable problems later.

Final thoughts

Setting up a limited company in the UK is more than filling in a form. You are creating a separate legal entity with its own rights, responsibilities and tax profile. Done well, it can be a tax-efficient, professional structure that protects your personal position and supports your long-term business journey. Done casually, it can lead to unnecessary cost, confusion and potential legal issues.

If you would like help choosing the right structure, registering with Companies House, understanding corporation tax, or setting up robust accounting and record keeping from day one, the team at 10CA is ready to support you with clear, practical advice.

Disclaimer

This blog is a general beginner’s guide to how to set up a limited company in the UK. It is based on information from Companies House and recent Finance Act updates available at the time of writing. It does not constitute legal, tax or financial advice.

Laws, tax rates and regulatory requirements change, and their impact depends on your personal circumstances. Before making decisions or relying on any information in this guide, you should seek professional advice tailored to your situation and check the latest official guidance on and with Companies House and HMRC or with your accountant.