You've decided to trade through a limited company, and now you want to do it properly without missing a step. Good instinct. Getting the setup right saves you fines, awkward HMRC letters, and a scramble at your first year-end.
This guide walks you through every stage, from choosing a name to registering for Corporation Tax. It's written for first-time founders, contractors going limited, and sole traders making the jump. We'll keep the jargon to a minimum and flag the bits that catch people out.
By the end you'll know exactly what Companies House needs, what it costs in 2026, and what you have to do in the weeks after you incorporate.
Is a limited company right for you?
A limited company is a separate legal person. It owns its own money, signs its own contracts, and is liable for its own debts. That's the headline benefit: your personal assets are generally protected if the business runs into trouble (this is "limited liability").
It also tends to be more tax-efficient once profits grow, because company profits are taxed at Corporation Tax rates rather than your personal Income Tax rates, and you can choose how to draw money out.
But it isn't free. A company has to file accounts and a confirmation statement at Companies House every year, file a Company Tax Return with HMRC, and keep proper records. There's more admin than being a sole trader.
If you're weighing it up, our guide for sole traders and our limited companies hub go deeper on the trade-offs. For early-stage founders, the startups page covers the wider setup too.
What do you need before you register?
You can register in an afternoon if you've gathered these first.
A company name. It has to be unique and can't be "the same as" an existing registered name. Some words are sensitive or need permission. Check availability before you fall in love with one.
At least one director. A director runs the company and is legally responsible for filing on time and keeping records. You don't have to appoint a company secretary, though many companies still do.
At least one shareholder. For a company limited by shares, you need a minimum of one shareholder, who can be the same person as the director. You'll decide how many shares to issue and their value (this is your statement of capital).
Your people with significant control (PSC). A PSC is anyone who holds more than 25% of the shares or voting rights, or who otherwise has significant influence over the company. You must identify them when you register.
A registered office address. This is the company's official address for the public register and for post from Companies House and HMRC. It must be a real address where documents can be delivered, not just a PO box, and it goes on the public record.
A SIC code. This short Standard Industrial Classification code says what your company does. You can pick more than one.
Memorandum and articles of association. The memorandum is a short statement that the first shareholders agree to form the company. The articles are the rules for running it. Most new companies use the standard "model articles", which is fine for the majority of small businesses.
Identity verification. This is the big change for 2026. Since 18 November 2025, identity verification at Companies House is a legal requirement under the Economic Crime and Corporate Transparency Act. New directors and PSCs must verify their identity when they incorporate a company. You can do this yourself through GOV.UK One Login, or an authorised agent such as your accountant can verify you. Build this in before you file, because you can't be appointed without it.
How do you register a limited company step by step?
Here's the order we use when we form a company for a client.
- Check a limited company is the right structure. Confirm the extra admin and filing obligations are worth the liability and tax benefits for your situation.
- Choose and check your company name. Make sure it's available and doesn't clash with an existing name or trade mark.
- Appoint your director (and secretary if you want one). Decide who's legally responsible for the company.
- Decide your shareholders and shares. Agree who owns what and prepare your statement of capital.
- Identify your PSCs. List anyone with more than 25% of shares or voting rights.
- Verify identities. Complete Companies House identity verification for directors and PSCs.
- Prepare your documents. Memorandum and articles of association, plus your registered office and SIC code.
- Register with Companies House. The fastest route is online. You'll usually be incorporated within 24 hours.
- Set up for Corporation Tax. You can usually do this at the same time as registering the company.
Most people register online directly with Companies House. If you'd rather not touch the forms at all, our company secretarial service handles formation and ongoing filings for you, with identity verification included.
How much does it cost to set up a limited company in 2026?
Companies House charges a flat registration fee, and the amount depends on how you file. These are the current Companies House fees.
| What you're filing | Online or software | Paper (postal) |
|---|---|---|
| Register (incorporate) a company | £100 | £124 |
| Same-day incorporation | £156 | n/a |
| Annual confirmation statement | £50 | £110 |
These are the current Companies House fees. The quickest and cheapest way to incorporate is online. There's no separate annual "fee" to keep a company alive beyond the confirmation statement charge, but you will have accountancy and filing costs to factor in.
You don't pay any tax simply to register. Tax starts once the company is active and earning profit.
What do you have to do after you register?
Incorporation is the start, not the finish. Here are the deadlines that matter, all of which run automatically once you're registered.
Register for Corporation Tax within 3 months of starting to do business. "Doing business" includes buying, selling, advertising, renting premises, or employing someone. You can often set this up when you incorporate. Register late and you may get a penalty.
File your first annual accounts within 21 months of the date you registered with Companies House. After that first set, annual accounts are due 9 months after the end of your company's financial year.
File your Company Tax Return within 12 months of the end of your accounting period for Corporation Tax.
Pay your Corporation Tax 9 months and 1 day after the end of your accounting period. Note that the payment deadline falls before the return deadline, which surprises a lot of first-time directors.
File a confirmation statement every year. This confirms your company details (directors, shareholders, PSCs, registered office) are up to date.
You'll also need to register as an employer for PAYE if you're going to pay yourself or anyone else a salary, and register for VAT if your taxable turnover goes over the £90,000 threshold (current threshold from 1 April 2024). Our corporation tax service keeps these dates in hand so nothing slips.
How does a director pay themselves? An illustrative example
One of the main reasons people go limited is the flexibility in how they draw money out: a mix of salary and dividends. Here's how that works in practice.
Illustrative example. Sam is the sole director and shareholder of a new company in 2025/26. The company makes £60,000 of profit before Sam's pay. Sam takes a modest salary plus dividends. (These are illustrative figures to show the mechanics, not personalised advice.)
Step 1: Sam takes a salary of £12,570 for the year, which equals the personal allowance for 2025/26, so no Income Tax is due on it. The salary is a business expense, so it reduces the company's taxable profit.
Step 2: The company's taxable profit is now £60,000 minus £12,570, which is £47,430. As profits are under £50,000, the company pays Corporation Tax at the small profits rate of 19% for FY2025. That's £47,430 times 19%, which is £9,011.70.
Step 3: After Corporation Tax, the company has £47,430 minus £9,011.70, which is £38,418.30 available to pay as dividends.
Step 4: Sam draws dividends. The first £500 is covered by the dividend allowance for 2025/26 and is tax-free. Sam's salary of £12,570 uses up the personal allowance, so the dividends are taxed in the basic-rate band at the ordinary dividend rate of 8.75% for 2025/26.
This shows why the salary and dividend split matters, and why the numbers depend on your exact profit, other income, and the tax year. To model your own position, try our dividend tax calculator and take-home pay calculator.
A quick planning point we see often: setting a salary at the secondary threshold of £5,000 for 2025/26 keeps the company clear of employer National Insurance on that pay, though many directors still set salary at the £12,570 personal allowance to maximise the tax-deductible cost. The right level depends on your wider circumstances, so it's worth a conversation.
Frequently asked questions
How long does it take to set up a limited company?
If you register online with Companies House and your details are in order, your company is usually incorporated within 24 hours. Gathering your name, directors, shares, PSC details and completing identity verification beforehand is what takes the time.
Do I need an accountant to set up a limited company?
No, you can register yourself directly with Companies House. Many founders use an accountant to make sure the share structure, registered office and Corporation Tax registration are set up correctly from day one, and to handle identity verification as an authorised agent.
Can I be the only director and shareholder?
Yes. A company limited by shares needs at least one director and at least one shareholder, and the same person can be both. Plenty of one-person companies run exactly this way.
Do I have to verify my identity to set up a company in 2026?
Yes. Since 18 November 2025, identity verification at Companies House is a legal requirement for new directors and people with significant control. You verify through GOV.UK One Login or via an authorised agent before you can be appointed.
When do I have to register for Corporation Tax?
Within 3 months of starting to do business, which includes buying, selling, advertising, renting premises or employing someone. You can often set this up at the same time as incorporating the company.
What's the difference between Companies House and HMRC?
Companies House is the registrar of companies. It handles incorporation, your annual accounts and confirmation statement. HMRC is the tax authority, dealing with Corporation Tax, PAYE and VAT. You'll have obligations to both.
Book a free Tax Health Check →
Want help setting up your company the right way?
Setting up is the easy bit. Staying on top of accounts, Corporation Tax and the new identity rules is where founders lose time. Book a free 20-minute call with a Zmartly accountant and we'll form your company, register it for Corporation Tax, and keep every deadline in hand. Talk to us at zmartly.co.uk/contact.
