- Incorporation cost: £50 online via Companies House — processed in 24 hours
- Register for corporation tax within 3 months of starting to trade
- Employer PAYE registration takes up to 5–10 working days — register before first salary
- VAT threshold: £90,000 — register before you exceed it
- Annual running costs (typical sole director): £1,500–£4,000
What you need before incorporating
Have the following ready before you start the Companies House registration:
| Required information | Notes |
|---|---|
| Proposed company name | Check availability on Companies House name checker — must be unique and not offensive |
| Registered office address | Must be a UK address — can be your accountant's or a virtual office address |
| Director details | Full name, date of birth, nationality, occupation, service address, home address (restricted) |
| Director's National Insurance number | Required for the application |
| Shareholder details | Names, addresses, number and class of shares each person holds |
| Share structure | Total shares to issue, nominal value per share |
| SIC code | Select the code that best describes your primary business activity |
| Articles of association | Model Articles (standard) are used by default — suitable for most sole directors |
Choosing your company name
Your company name must end in 'Limited' or 'Ltd'. Rules:
- Must not be identical to an existing registered name
- Cannot imply a connection with government or royalty without approval
- Sensitive words (Bank, Institute, Royal, etc.) require separate approval
- Your trading name can differ from your registered company name — you just need to display the registered name on business documents
Share structure for a solo director
For a simple sole director setup, the standard share structure is:
- 100 ordinary shares at £1 each (total share capital: £100)
- All shares held by the director
This structure is clean, flexible, and leaves room to issue shares to a spouse, employee, or investor in the future if needed. It is the most common structure for sole director companies and is what accountants and formation agents default to unless you specify otherwise.
Alphabet shares: If you anticipate adding a spouse or family member as a shareholder to enable dividend income splitting in future, consider creating A and B share classes from the start. Reorganising share classes later is possible but involves legal work. This is worth discussing with an accountant before incorporating.
How to incorporate
Three routes to incorporation:
| Route | Cost | Processing time | Best for |
|---|---|---|---|
| Companies House WebFiling (direct) | £50 | 24–48 hours (business days) | Directors comfortable doing it themselves |
| Companies House same-day service | £78 | Same day if submitted before 3pm | Urgent incorporations |
| Formation agent (e.g., 1st Formations, Rapid Formations) | £10–£50 | Same or next day | Those who want help, often include documents package |
| Accountant | Often free as part of onboarding | 1–2 days | Combining with accountancy engagement |
First 30 days: essential checklist
Once incorporated, the clock starts on several time-sensitive registrations:
| Task | Deadline | Where |
|---|---|---|
| Open a business bank account | Immediately — before any transactions | High street bank or challenger (Tide, Starling, Monzo Business) |
| Register for corporation tax | Within 3 months of starting to trade | HMRC online — notify of new company trading |
| Register as an employer | Before paying first salary | HMRC — allow 5–10 working days for references |
| Register for VAT (if above threshold) | Within 30 days of exceeding £90,000 turnover | HMRC VAT registration |
| Set up accounting software | Immediately — first transaction sets the tone | FreeAgent, Xero, or QuickBooks |
| Board minute your salary | Before the first salary payment | Internal company record — keep with company documents |
| Arrange professional indemnity insurance | Before starting client work | Many clients require it as a contract condition |
| Register for Self Assessment (if not already) | By 5 October after the tax year you first have income to declare | HMRC |
Registered office: options
| Option | Cost | Privacy | Notes |
|---|---|---|---|
| Your home address | Free | Home address publicly visible on Companies House | Simple but exposes your home address |
| Your accountant's address | Often free with accountancy package | Home address stays private | Best option for most directors |
| Virtual office service | £5–£20/month | Home address stays private | Useful if you want independence from your accountant |
Annual running costs: what to budget
| Cost | Typical annual amount |
|---|---|
| Accountancy fees (sole director, straightforward) | £800–£2,500 |
| Confirmation statement | £34 |
| Accounting software | £200–£420 (£17–£35/month) |
| Business bank account | £60–£180 (£5–£15/month — some are free) |
| Professional indemnity insurance | £150–£600+ (sector dependent) |
| Payroll software | Free (HMRC Basic PAYE Tools) to £360/year |
| Total estimated range | £1,244–£4,100+ |
Common formation mistakes to avoid
- Starting to trade before incorporating: any income earned personally before incorporation is taxed as personal income — the company cannot retrospectively claim it
- Not registering for CT within 3 months: HMRC sends a penalty if you notify late
- Paying salary before registering as an employer: creates a late registration penalty and back-dating complications
- Using the company bank account for personal payments: from day one, keep the accounts completely separate
- Not documenting the first salary decision: minute the director's salary before the first payment — this is a formal board decision
Use the calculator
Frequently asked questions
Should I use my home address as the registered office?
You can, but it becomes permanently visible on the public Companies House register. Most directors use their accountant's address or a virtual office address (£5–£20/month) to protect their privacy. Your home address must still be provided to Companies House but is restricted from public view.
What share structure should I use?
For a simple sole director setup: 100 ordinary shares at £1 each, all held by you. This is standard, clean, and leaves room for future changes. If you anticipate adding a spouse or investor as a shareholder, consider creating share classes (A and B ordinary shares) from the start — it is easier than reorganising later.
Do I need a company secretary?
No — private limited companies have not been required to have a company secretary since the Companies Act 2006. The director fulfils all statutory obligations. If you want to appoint one (e.g., your accountant), you can, but it is optional.
Can I use a formation agent instead of Companies House directly?
Yes. Formation agents (1st Formations, Rapid Formations, Jordans, etc.) submit the application on your behalf, often within hours, and typically include a documents bundle (share certificates, first board minutes template). Costs range from £10–£50. Many accountants handle formation as part of their onboarding process.
When does the company start trading?
The company can trade from the date it is incorporated. However, registering for CT, employer PAYE, and VAT (if needed) takes time — you should have those registrations in place before incurring significant turnover. Some directors form the company 4–6 weeks before they intend to start trading to ensure everything is in order.
Important: This guide is for general information only and does not constitute tax or legal advice. Tax rules change — always verify current rates and thresholds with HMRC or a qualified accountant before making decisions.