Setting up a limited company

A private limited company is a separate legal person from the people who own and run it. Setting one up, known as incorporation, means registering it with Companies House. At that point you choose a company name, give a registered office address, name at least one director, set out who the shareholders are and who has significant control, and adopt articles of association, the rulebook for how the company is run. Many people use the standard model articles.

Since 18 November 2025, identity verification has been part of the process. GOV.UK says new companies must provide a Companies House personal code for each director at incorporation. Directors can verify through GOV.UK One Login or through an Authorised Corporate Service Provider, such as a formation agent or accountant registered to do so.

Once the company exists, it has its own obligations: keeping accounting records, filing accounts with Companies House, filing a company tax return with HMRC, and confirming its details every year.

People incorporate for different reasons, and it is not right for everyone. Common examples include:

• a sole trader whose profits have grown and who wants to look at whether a company structure suits them better
• two or three friends starting a business together who want clear shareholdings
• a contractor whose clients or agencies prefer to deal with a company
• someone launching a product who wants the business separate from their personal finances
• a community group setting up a company limited by guarantee

It is worth weighing the extra paperwork and costs against any benefits before you go ahead, ideally with an accountant who knows your figures.

The table below sets out the main Companies House fees and early deadlines from GOV.UK. Existing directors of older companies confirm their identity as part of the company's next confirmation statement, and the statement now includes a tick to confirm that each director has verified their identity.

Companies House charges penalties for late accounts. For a private company these start at £150 for accounts up to one month late and rise to £1,500 for more than six months, and the penalty is doubled if accounts are late in two successive years.

On the tax side, HMRC says the company tax return is due 12 months after the end of the accounting period it covers, and corporation tax is usually payable 9 months and one day after the end of the period. Corporation tax for the 2026 financial year is 19% on profits under £50,000 and 25% on profits over £250,000, with marginal relief between the two.

Many people form their own company directly with Companies House, and the online process is designed to be used without help. If you have your name, address, director and shareholder details ready and the directors have verified their identity, it can be straightforward.

Where people tend to want help is with the decisions around it rather than the form itself: whether a company is the right structure at all, how to split shares between founders, what to pay yourself, whether to register for VAT, and setting up bookkeeping and payroll from day one. Formation agents and accountants often bundle incorporation with a registered office address or an accounting package, so check what you are actually paying for.

Once trading, a company has more filing deadlines than a sole trader, so our pages on accountants for contractors and VAT returns may be useful next steps.

If you use an accountant or formation agent, ask:

• Does the price include the Companies House fee, and is VAT added?
• Are you registered as an Authorised Corporate Service Provider if you will handle identity verification?
• Will you provide a registered office address, and what does it cost each month?
• What is included after formation, such as registering for corporation tax, PAYE or VAT?
• Is your firm supervised for anti-money laundering by HMRC or a professional body, as the law requires of accountancy service providers?
• Who will be my contact once the company is running?

Ask for the scope and fees in writing.

Beyond the £100 Companies House fee, formation services vary. 1st Formations lists its Digital package at £102.99 excluding VAT, a price that includes the £100 Companies House fee. Running costs after formation are a separate matter; see our guide to accountant costs.