Starting a business in the UK can seem daunting, but setting up a limited company is a straightforward process if you know the steps. Whether you’re an aspiring entrepreneur, freelancer, or small business owner, this guide will walk you through everything you need to know.

What is a Limited Company?

A limited company (Ltd) is a business structure where the company is a separate legal entity from its owners. This means:

  • Owners’ personal assets are protected from business debts.
  • The company can enter contracts, employ staff, and pay corporation tax.
  • Profits can be reinvested or paid to directors as dividends.

Because of these protections and professional benefits, forming a limited company is one of the most popular ways to start a business in the UK.

Step 1: Choose Your Company Name

Your company name must be unique and follow UK rules. Avoid names that are:

  • Similar to existing companies
  • Offensive or misleading
  • Containing restricted words (unless you have permission)

Use the Companies House name checker to make sure your name is available.

Step 2: Decide on Directors and Shareholders

A limited company must have at least:

  • One director (who can also be a shareholder)
  • At least one shareholder (can be the same person)

If there are multiple owners, decide how shares will be distributed.

Step 3: Register Your Company Address

You must provide a UK business address for official correspondence. This address:

  • Will appear on the public register
  • Can be your home address or a separate office

Step 4: Prepare Your Company Documents

You’ll need two key documents:

  • Memorandum of Association – legal statement signed by the initial shareholders.
  • Articles of Association – rules about running the company (you can use standard model articles or customise them).

We offer ready-to-use legal templates for these documents, so you can save time and ensure compliance.

Step 5: Register with Companies House

You can register your company online or by post. Information required includes:

  • Company name
  • Registered office address
  • Director(s) and shareholder(s) details
  • Statement of capital and shares
  • Articles of Association

The online registration fee is £12, and your company is usually set up within 24 hours.

Step 6: Register for Corporation Tax

Within 3 months of starting your business, you must register for Corporation Tax with HMRC. This allows you to:

  • File annual tax returns
  • Pay corporation tax on profits
  • Claim business expenses

Step 7: Set Up a Business Bank Account

A dedicated business bank account helps you:

  • Keep finances separate from personal funds
  • Simplify accounting and tax reporting
  • Build credibility with customers and suppliers

Step 8: Keep Records and Stay Compliant

Once your company is registered, you must:

  • Keep accounting records
  • File annual accounts and confirmation statements
  • Comply with UK employment and tax laws

Our free interactive checklist can help you track every legal step for your new company.

Tips for a Smooth Limited Company Setup

  • Use professional templates for legal documents to avoid mistakes
  • Keep your company records up to date to prevent fines
  • Understand your tax obligations early to avoid surprises

Conclusion

Setting up a limited company in the UK doesn’t have to be complicated. By following these steps—and using our legal templates and free checklist—you can start your business confidently and stay legally compliant.