How do I set up a limited company?

You incorporate through Companies House, usually online for a small fee, choosing a company name, at least one director, shareholders, any people with significant control, and a registered office. You then register the company for Corporation Tax with HMRC.

What are a director's responsibilities?

Filing annual accounts with Companies House and a Company Tax Return with HMRC, keeping proper records, meeting deadlines and running the company in its best interests. Missing filing deadlines brings automatic penalties.

Is a limited company more tax-efficient than being a sole trader?

It can be, once profits reach a certain level, thanks to the mix of salary and dividends and Corporation Tax rates. But it brings more admin and less privacy, so the right answer depends on your profit and plans.

What is a person with significant control (PSC)?

Anyone who owns or controls more than 25% of a company. PSCs have to be recorded on a public register at Companies House as part of company transparency rules.

How to set up a limited company

Setting up a limited company is quick and cheap to do — you can incorporate online in an afternoon. The bigger question is whether you should, and understanding what you're taking on, because a company brings real advantages and real responsibilities in equal measure.

What a limited company is

A limited company is a separate legal entity from you. That's the key idea. The business's money is the company's, not yours; its debts are generally the company's, not yours (that's the "limited liability" bit); and it pays its own tax — Corporation Tax — on its profits. You extract money from it as a director and shareholder through a mix of salary and dividends.

How you set one up

You incorporate through Companies House, usually online, for a small fee. You'll need to decide:

A company name — unique, and not too similar to an existing one.
Directors — at least one, responsible for running the company and meeting its legal duties.
Shareholders — the owners; often the same person as the director in a small company.
People with significant control (PSCs) — anyone who owns or controls more than 25%, recorded on a public register.
A registered office address — a public address for official post.

Once incorporated, you'll also need to register the company for Corporation Tax with HMRC, and for VAT and PAYE if and when those apply.

What being a director means

This is the part people underestimate. As a director you take on legal duties: filing annual accounts with Companies House, filing a Company Tax Return with HMRC, keeping proper records, and running the company in its best interests. Miss the deadlines and there are automatic penalties. It's all manageable, but it's more than a sole trader deals with, which is exactly why the decision is worth thinking through.

Is a company right for you?

A limited company can be more tax-efficient than being a sole trader once your profits reach a certain level, and the limited liability and credibility can matter too. But it comes with more admin, more filing and less privacy. There's no single threshold that fits everyone — it depends on your profit, your plans and your appetite for the extra responsibility. Our guide on sole trader vs limited company digs into the trade-off.

Get it set up properly

Incorporating is the easy part; setting the company up well — the right share structure, the tax registrations, an efficient way to pay yourself, and a system to stay on top of the filings — is where good advice pays for itself. We help new limited companies get all of that right from day one. If you're weighing it up, talk to us first — it's easier than unpicking it later.