Thinking about going limited? Here's what you need to know.
Setting up a limited company can be an exciting step for your business.
Maybe you're moving away from being a sole trader, launching a new online business or setting up with a business partner.
A limited company can offer benefits, but it also comes with responsibilities that you need to understand.
Here's how to get started without the headache.
1. Understand what a limited company actually is
A limited company is a separate legal entity from its owners.
That means the company can enter contracts, own assets, employ people and owe money in its own name.
Its shareholders own the company, while its directors are responsible for managing it.
Limited liability can offer protection to shareholders, but directors still have legal duties and may have personal responsibilities in certain circumstances.
2. Choose your company name
Before registering, check whether your preferred name is available at Companies House.
Your name must follow company naming rules and should not be too similar to an existing registered name.
It's also worth checking website domains and trademarks.
You don't want to pay for a beautiful new logo only to discover the name causes problems.
3. Decide who your directors and shareholders will be
You'll need to establish:
Who will be a director
Who will own the shares
How many shares will be issued
Whether different share classes are appropriate
Who has significant control over the company
Share structure can affect dividends, voting rights, control and future changes.
Getting this right at the beginning is much easier than trying to untangle it later.
4. Complete Companies House registration
You'll generally need a registered office address, registered email address, appropriate company information and constitutional documents.
Directors and people with significant control must also comply with Companies House identity verification requirements.
Since 18 November 2025, identity verification has been phased into the legal requirements for directors and relevant company roles.
Make sure you follow the current rules rather than relying on an old company formation checklist.
5. Open a company bank account
Your company money belongs to the company, not you personally.
Keep company transactions separate and avoid using the business account for personal spending.
A payment to yourself might be salary, dividends, an expense reimbursement or a director's loan, depending on its nature.
These have different accounting and tax treatments.
6. Set up bookkeeping from day one
Don't wait until the first year-end to start sorting your accounts.
Record your income, expenses, bank transactions and receipts throughout the year.
If you're selling online, you may also need to track marketplace fees, payment processors, stock, returns and refunds.
Good bookkeeping helps you understand profitability and prepare for tax.
7. Understand Corporation Tax
A limited company normally pays Corporation Tax on its taxable profits.
You need to make sure HMRC is informed when the company becomes active for Corporation Tax purposes and meet the applicable registration and filing requirements.
The company will also need to prepare annual accounts and a Company Tax Return.
8. Know your filing deadlines
For a typical established private limited company:
Annual accounts are generally due at Companies House nine months after the financial year-end.
Corporation Tax is generally payable nine months and one day after the relevant accounting period ends.
The Company Tax Return is normally due 12 months after the accounting period ends.
A confirmation statement is normally required at least every 12 months.
First accounts and unusual accounting periods can have different deadlines.
9. Decide how you'll pay yourself
As a director and shareholder, you may receive salary, dividends or other payments, depending on your circumstances.
Dividends are not the same as wages and should not be treated as an ordinary business expense.
You also need to check that the company has sufficient distributable profits before paying dividends.
10. Plan for ongoing responsibilities
Running a limited company involves more than registering it.
You'll need to monitor tax, bookkeeping, filing deadlines, statutory records and potentially payroll and VAT.
But that doesn't mean you need to do it all yourself.
Need help setting up?
Accounting On You helps new and established limited companies understand their accounts, taxes and responsibilities.
You build the business. We'll help keep the financial side organised.
Explore our limited company packages at www.accountingonyou.com.
General UK guidance. Company structures, legal duties and tax obligations depend on individual circumstances.