Setting up a private limited company is perhaps simpler than you may think. You can incorporate yourself, or use a professional to do this for you.
Here we look at what you need to form a company, the formation costs, and how the incorporation process works.
How do I set up a new company? Options and costs
There are a few different ways that you can register your company.
You can form online directly via Companies House, indirectly via an accountant, or by using a formations agent.
1. Companies House (direct)
If you decide to set up a company directly via Companies House, you can be set up within 24 hours for a mere £12.
It is also possible to register directly via post using an IN01 form. However, this can take between 8 to 10 days and costs £40.
2. via a Formations Agent
You can also use a formations agent to set up a new company.
This option has the added benefit of on-hand assistance should you have any questions, especially if you are a first-time company owner.
Most formation agents also offer additional services which you might need – such as a registered office address.
Clever Formations offers company formation packages from £10.95.
3. via an Accountant
You might choose another option – to hire an accountant to set up your company.
Hiring an accountant early on is a good idea, as they will be able to advise you on a whole range of matters prior to formation – including the best share structure to use, and advice if you are co-owning the business with your spouse.
An accountant will either charge a one-off fee, or provide the formation as part of your annual fee as a new client.
You can browse our growing list of accountants here.
Now let’s look at the information you will need to have ready for the formation process.
8 things you need before you set up a limited company
Before you start the incorporation process, you will need to have some specific information to hand.
The vast majority of companies have shareholders, however you may also set up a company limited by guarantee (such as a charity, or club, for example). This guide is aimed at those limited by shares.
1. Limited company name
Understandably, there are various restrictions to names you can choose, to ensure a new name is not too similar to an existing name, breaches trademarks or claims to be something it is not.
2. Your company’s official registered address
This must be a physical address where you can receive official communications. You may decide to use your accountant’s address or even your residential address. R
ead our guide to choosing your company’s registered address.
3. Your company’s SIC code
This stands for Standard industrial classification of economic activities. You need to decide which SIC code(s) relate to your new company.
Here are some common examples of SIC codes.
You can search the SIC database here.
4. Share capital (for companies limited by shares)
You must provide details of the company’s share capital (how shares will be divided up). Who are the shareholders (including names and addresses), how many shares will they each hold, and what class of shares will you create?
Many small limited companies simply decide to have 100 ‘ordinary’ £1 shares. You can always create new classes of share capital at a later stage.
5. Details of the company’s officials
To set up a company, you will need to have at least one director. You may decide to appoint a company secretary, however, this is an optional appointment. You will need to provide each official’s full name, date of birth, nationality, occupation, and full address.
Find out who can become a company director.
Although you need to provide each person’s residential address, you can also provide a ‘service address’ for each official which will appear on the public record and can afford extra privacy if required.
6. Details of all People with significant control (PSC)
You must provide details of any people who will have ‘significant control’ within your company, for example, a person has 25% or more of the company’s shares or voting rights.
You can read more in this PDF document.
7. Articles of Association
The Articles are the ‘rule book’ which govern how your company will be run. During the incorporation process, you can elect to use the Companies House ‘model’ articles, which are likely to suffice for most new companies.
8. Memorandum of Association
The Memorandum is signed by all shareholders and states that every shareholder has agreed to form the new company. In practice, this document is automatically created during the formation process.
How do I form a new company in the UK from overseas?
With companies that are based overseas, you will need to register in a slightly different way if you want to register your business with Companies House and set up a place of business in the UK.
If you need any advice, it is best to contact the Department for International Trade as not all company types can register – this includes unincorporated bodies and partnerships.
To register, you will need to fill out an OS IN01 form and send it to Companies House within the first month of opening your business. Along with the form, you will need to send in a £20 registration fee, which can be paid via cheque or postal order.
How do I know when my new company is successfully formed?
Once your registration is complete, you will receive a certificate of incorporation. This will prove that your company legally exists, and will also have important information on it such as your company number and on what date it was formed.
What shall I do next?
Once registered, you will receive a letter from HMRC asking you to register your newly formed company to pay Corporation Tax once it has started trading.
You may also need to register for VAT depending on your turnover, or if you’d like to register regardless.
Once you are trading, if you want to pay yourself a salary, or hire any staff, you will need to register with HMRC as an ’employer’, and set up a payroll to pay your employees, and work out any deductions owed.
You will need to keep Companies House updated should any key details change for your registered limited company (or its officials), including names, addresses, what the business does, or who the directors/secretaries/shareholders are.
You (or your accountant) can submit all of these changes online. You can view a list of all the possible forms you will need here.
Register a new company from just £10.95
Our registrations partner – Clever Formations – offers a variety of company formation packages – from £10.95.