How to Set Up a Limited Company (Step-by-Step UK Guide)

Setting up a limited company in the UK is quicker and cheaper than most people expect — often done within 24 hours for a small fee. The trick is getting it set up correctly so it’s tax-efficient and compliant from day one. Here’s the full step-by-step.

Before you start: is a limited company right for you?

A limited company is a separate legal entity that can be more tax-efficient than being a sole trader and limits your personal liability — but it comes with more admin. If you’re not sure it’s the right move, read our honest comparison of sole trader vs limited company first.

If you’ve decided to go ahead, here’s how.

Step 1: Choose a company name

Your name must be unique, end in “Limited” or “Ltd”, and avoid restricted or sensitive words without permission. Check it’s available before you commit — our free company name checker searches the live Companies House register and flags name-rule issues.

Step 2: Decide directors and shareholders

• Directors: you need at least one (aged 16+). They’re legally responsible for running the company and filing on time.
• Shareholders: you need at least one — often the same person as the director. The shares determine who owns the company and how dividends are split.
• People with Significant Control (PSC): you must identify anyone who owns or controls more than 25% of the company.

For a one-person company, you’re typically the sole director and sole shareholder.

Step 3: Sort the practical details

You’ll need:

• A registered office address in the UK (this becomes public — many people use their accountant’s address)
• SIC codes — standard codes describing what your business does
• Memorandum and articles of association — the standard versions are fine for most companies

Step 4: Register with Companies House

Register online at GOV.UK for £50 (the standard digital fee). You’ll enter your name, directors, shareholders, PSC, registered office and SIC codes. It usually takes about 15 minutes, and the company is normally incorporated within 24 hours.

When you register, you’ll get your certificate of incorporation and your company registration number.

Step 5: Register for tax

Setting up the company isn’t the end — you also need to handle tax:

• Corporation Tax — register with HMRC within 3 months of starting to trade (often done automatically during incorporation)
• VAT — only if your turnover exceeds £90,000, or voluntarily
• PAYE — if you’ll pay yourself or anyone else a salary

Step 6: Set up the essentials

• A business bank account — a legal requirement for a limited company (the company’s money is separate from yours)
• Bookkeeping software — to keep records ready for your accounts
• Know how you’ll pay yourself — usually a small salary plus dividends (see our guide to director’s salary and dividends)

What happens next

Once you’re up and running, a limited company has ongoing duties: annual statutory accounts and a Corporation Tax return, a yearly confirmation statement, and keeping your records straight. We cover those in our guide to limited company accounts.

Get it set up right

You can do all of this yourself — but getting the share structure, registered office and tax registrations right from the start saves money and headaches later. Our company formation service sets your company up correctly and tax-efficiently, and our accountants for limited companies keep it compliant for a fixed monthly fee — often the same day you decide to go ahead.