How to Set Up a Limited Company

4th December 2025

If you’ve never set up a business before, forming a limited company can feel like unfamiliar territory. What documents do you need? Who can be a director? When should you register? What happens after incorporation? These are the questions almost every new business owner asks, and they’re surprisingly far easier to answer than you’d think.

Despite this, one misstep at the registration stage can create delays or complications later on. Getting your company formation right matters. Your structure affects your tax obligations, your legal responsibilities, the way you pay yourself, and how potential clients view your business. That’s why 99p Company Formations wanted to walk you through the process step by step, removing the jargon and giving you a clear understanding of how to set up a limited company properly.

1. Decide whether a limited company is right for you

Before registering, it’s important to understand the advantages of operating as a limited company compared with staying as a sole trader or partnership.

Limited liability protection

A limited company is a separate legal entity. This means that, in most circumstances, your personal assets, your home, car, savings, are protected if the business runs into financial difficulty. Your liability is limited to the value of your shares.

Professional credibility

Many clients, suppliers, and larger organisations feel more confident working with incorporated businesses.

A limited company can improve your credibility, particularly if you're pitching for contracts, working in regulated industries, or developing long term commercial relationships.

Potential tax efficiency

Limited companies may benefit from tax planning opportunities, such as paying themselves through a combination of salary and dividends. Although circumstances vary, this structure often becomes more tax efficient as profits grow.

Clear ownership and investment opportunities

A limited company allows you to issue shares, bring in investors, or allocate ownership between business partners.

Long term stability

Unlike a sole trader business, a limited company continues to exist even if you leave or sell your shares.

If you want a more professional structure with clear legal protection and room to expand, forming a limited company is often the most suitable option.

2. Deciding the type of Limited Company

When setting up a UK limited company, you need to choose whether it will be:

Limited by Shares, or
Limited by Guarantee

Each is suited to different purposes.

A company limited by shares:

The company is owned by shareholders.
Shareholders invest capital in return for shares, and liability is limited to the amount unpaid on those shares.
Profits can be distributed to shareholders as dividends.
This structure suits most standard businesses, start ups, or any profit driven venture.
You must issue at least one share and have at least one shareholder.

A company limited by guarantee:

The company does not have shareholders or share capital. Instead, it has guarantors (members) who agree to pay a guaranteed amount (typically a nominal sum) if the company is wound up.
There are no shares, so profits generally are not distributed to members, any surplus stays within the organisation.
This structure is typically used by non profit organisations, charities, clubs, associations, and community groups.
Guarantors’ liability is limited to their agreed guarantee after that, personal assets are protected.

3. Choose a company name

Your company name represents your brand and must follow strict rules to be accepted by Companies House.

The following requirements must be met:

It must be completely unique
It cannot be too similar to another company name
It must end with “Limited” or “Ltd” unless exempt
It cannot imply government authority
It must not be offensive or misleading

Additional considerations for branding:

Alongside the above requirements, here are a few tips for making sure your name is right for your business before selecting it:

Keep it easy to spell and memorable
Check that a matching domain name is available
Ensure it aligns with your long term business goals

99p Company Formations can quickly verify whether your chosen name is available.

4. Choose a registered office address

Your registered office address is your official contact point with Companies House and HMRC. It must be a physical address within the UK and will appear publicly on the Companies House register.

If you’re working from home or prefer not to publicly disclose your residential address, using a professional address service ensures your privacy and keeps the business looking credible.

You can change your office address at a later date for a small fee.

5. Appoint at least one director

Directors are legally responsible for overseeing the company’s compliance. Even small companies with a single founder must appoint at least one director. If you’re setting up a Limited Company then it is likely you will have already appointed a Director or have someone in mind, but you will require the following details from them for your Companies House registration:

Full name
Date of birth
Residential address (kept private)
Service address (public)
Nationality
Occupation

6. Decide your shareholders and your share structure

A limited company must have at least one shareholder, and this can be the same person as the director.

You’ll need to decide:

The number of shares: Most new businesses issue a simple structure of one share worth £1.
However, if you have multiple founders, you may issue more shares to divide ownership.

The value of each share: Typically £1 each for simplicity.

Who owns the shares: Shareholders can be individuals or other companies.

If you need different share classes: For example: Ordinary shares (most common), preference shares, or non voting shares.

7. Prepare the required documents

Two key documents must be included when forming your company:

a. Memorandum of Association: This confirms that the initial shareholders agree to form the company. It is created automatically if you register online.

b. Articles of Association: These outline how the company will be run internally, rules for directors, shareholders, meetings, and decision making.

Most small companies use the Model Articles, which cover all standard requirements. Custom articles are only necessary if you have unusual share structures or specific investor arrangements.

You will also need:

Statement of Capital (for companies limited by shares)

This document outlines:

The number of shares
The types (classes) of shares
The nominal value of each
Total issued share capital
Shareholder information

Statement of Guarantee (for companies limited by guarantee)

If your company has guarantors instead of shareholders, this document confirms:

The name of each guarantor
The amount each one agrees to pay if the company is wound up
Their membership details

8. Submit your application to Companies House

You can register:

Directly through Companies House
Or through a formations agent like 99p Company Formations, who handles everything for you

Digital applications are usually approved within 24 hours.

10. What happens after registration?

Once approved, you’ll receive:

A Certificate of Incorporation
A Company Registration Number (CRN)
Confirmation of all key company details

You must then:

Register for Corporation Tax within 3 months
File annual accounts
File an annual Confirmation Statement
Keep statutory records up to date

Ready to register your company?

With clear preparation and the right information, registering your limited company with Companies House is a straightforward process. If you prefer a simplified, supported experience, 99p Company Formations offers fast, affordable incorporation services with optional add ons to help your business stay compliant from day one.

We offer full registration services that help you begin trading without the administrative hassle. Call us today to get started.