A step by step guide to setting up a limited company in 2026/27, what you need to register, and the first steps and duties once it is formed.
Setting up a limited company is quicker and cheaper than most people expect, and can often be done online in a single afternoon. But it is worth understanding what you are committing to, because a company brings ongoing responsibilities as well as benefits. This guide walks you through how to set up a limited company in 2026/27 and what to do once it is formed.
Before you register, it is worth being sure a company suits you, rather than staying a sole trader. A company gives limited liability and can be more tax efficient at higher profits, but it brings more administration and public filings. If you are unsure, it is worth comparing the two for your own figures first.
To form a company you need a company name that is not already taken, at least one director, at least one shareholder, who can be the same person, a registered office address that will appear on the public record, and details of the shares. You will also choose a SIC code, which describes what your business does. Most small companies are set up with a single director who owns all the shares.
You register the company with Companies House. You can do it directly on the Companies House website, which is inexpensive and usually approved within 24 hours, or through a formation agent or your accountant. You provide the details above and some personal information for identity checks. Once approved, you receive a certificate of incorporation confirming the company legally exists.
Most small companies issue a simple share structure, often a small number of ordinary shares owned by the director. The share structure decides who owns the company and how dividends can be split, so if more than one person is involved it is worth getting advice to set it up correctly from the start.
Once the company exists, there are a few first steps. You register the company for corporation tax with HMRC, usually within three months of starting to trade. You open a business bank account in the company's name, because the company's money is legally separate from yours. If you will pay yourself or staff a salary, you register for PAYE. And you set up proper accounting records from day one.
Running a company brings annual duties. You must file annual accounts and a corporation tax return, pay any corporation tax, and file a confirmation statement each year to keep your details up to date at Companies House. Directors also have legal duties to run the company properly. None of this is difficult with the right support, but it is more than a sole trader has to do.
Register with Companies House online, providing a company name, at least one director and shareholder, a registered office and a SIC code. It is inexpensive and usually approved within 24 hours.
Registering directly with Companies House online costs a small fee, while formation agents and accountants charge more for added services.
Register for corporation tax, open a business bank account, register for PAYE if you pay salaries, and keep proper accounting records.
Filing annual accounts and a corporation tax return, paying corporation tax, and filing a confirmation statement each year at Companies House.
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