Adnan did his at 11:40 on a Tuesday night. Sofa, laptop on a cushion, football highlights on mute. A client in Reading had emailed him around half four to say they couldn’t put his invoice through without a company registration number, and he’d spent the rest of the afternoon pretending that wasn’t urgent.
Nineteen minutes, start to finish. He was pretty pleased with himself.Then he picked a SIC code that said “other business support service activities” because scrolling the list irritated him, put his flat in Salford down as the registered office, and by mid-February had post arriving addressed to “The Directors” offering him pallet racking, an asbestos survey and a franchise opportunity in mobile car valeting.
Nothing broke. He lost a Saturday in March changing the address and he still pulls a face whenever the code comes up.That’s the whole lesson in miniature, though. Registering isn’t the hard part. Twenty minutes with your details in front of you and it’s done. What costs you later is the handful of small choices buried in those twenty minutes, the ones you make on autopilot because the form is right there and the client is waiting.
Anyway. Here’s the order I’d do it in.
It’s a separate person now, not a nickname
The company isn’t you with a fancier email signature. It’s a separate legal person with its own bank account, its own tax bill and its own name at the bottom of contracts.
Which has two consequences that matter more than anything else in this article.The money in that account isn’t yours. It belongs to the company until it comes out to you properly, as salary or a dividend or a repayment of something you lent in. I watched a genuinely sharp bloke put a £900 dining table on the company card because there was cash sitting there and it felt like his cash, and then spend most of a spring untangling it with an accountant who charged by the hour. It’s the single most common early mistake and it never feels like a mistake at the time.
Second one: if the business ends up owing a supplier fourteen grand and folds, they’re chasing the company. Not your car, not your house. That’s the “limited” in limited company. It leaks in places, personal guarantees on a lease, an overdrawn director’s loan, anything that starts to look like fraud, but as a starting position it’s real cover and it’s the reason the structure exists.
Honestly? I think the tax angle gets discussed far more than it earns, and the credibility angle nowhere near enough. A lot of UK firms just won’t put a sole trader on their approved supplier list. Procurement asks for the company number, you haven’t got one, and the email thread quietly dies. Nobody explains that to you. It isn’t fair either. It’s still the room you’re walking into.
Do this bit before you open the form
The name
It needs to be properly different from what’s already registered, not cosmetically different. Sticking “Ltd” on the end doesn’t count. Swapping an ampersand for the word “and” doesn’t count. A handful of words are restricted too, mostly the ones that imply you’re bigger, older or more official than you are.
Three checks, in this order: Companies House name availability search, then the domain, then Instagram. All three, before you commit. Someone I know incorporated a lovely name on a Thursday and found out an hour later the handle belonged to a dead account from 2016 with two posts and a profile picture of a cat.
Also, and people don’t realise this, your registered name and your trading name don’t have to match. You can be Nightjar Studios Ltd and trade as Nightjar. Handy when the name you actually wanted is technically taken by a dormant company in Lincolnshire.
Directors and shareholders
Different jobs. Constantly confused.A director runs the thing and carries the legal duties. A shareholder owns it and takes the dividends. In a one-person company the same human does both, which is exactly why the distinction feels like paperwork pedantry right up until the day it doesn’t.
Going in with a partner? Sort the split now, while everybody’s friendly and nobody’s tired. 50/50 sounds generous and deadlocks the moment you disagree about something that actually matters, and the disagreement is always about money or about how hard the other person is working. 51/49 with a proper conversation, or a shareholders’ agreement if there’s real money involved.
The two fields everyone rushes
Registered office address first. This one goes on the public register. Your name, that address, your month and year of birth, all sitting on a website Google indexes happily. Work from home and that’s your home address published permanently, plus the junk mail, plus the occasional caller who’s decided a doorstep visit is a sales strategy.
You can pay someone to be your registered office instead. Thirty to eighty quid a year, they scan the post and forward it, your address stays private. Most of the add-ons the formation companies push at you aren’t worth it. This one is, and it’s the only one I’d tell a friend to buy without thinking about it much.The address has to be somewhere real where post gets dealt with, in the same UK nation you’re registering in. A PO box on its own won’t do any more.
Then the SIC code. Five digits describing what your company does, chosen from a list nobody has ever enjoyed reading. Pick the closest honest match and pick it on purpose, because banks look at it when they’re deciding whether to open your account and some codes carry a risk flag that turns a two-day approval into three weeks of questions. This is precisely where Adnan went wrong. Four extra minutes. You can list up to four codes if your work genuinely spreads across a few areas.
Shares are simpler than they sound. One share, one pound, held by you. Or a hundred at a pound each if you’d like round numbers for splitting ownership later on. Don’t issue ten thousand shares because the number looks impressive on a certificate, since that’s ten thousand pounds you technically owe your own company.
How to set up a limited company, step by step
First job, and this trips people up because it’s new: verify your identity. Since 18 November 2025 anyone becoming a director or a person with significant control has to be verified with Companies House before they can be appointed. You do it through GOV.UK One Login or via an authorised agent, and what you get back is a personal code. No code, no incorporation. Start here, because it’s the one bit that won’t be rushed at 11pm.
Then gather everything in one place so you’re not hunting mid-application:
- Full name, date of birth, National Insurance number
- Current home address and your address history
- Your Companies House personal code
- Company name, registered office, SIC code
- Share details, and three security answers (mother’s maiden name, that kind of thing) which act as your signature
Next, the articles. Memorandum and articles of association, which is the company’s rulebook. For a straightforward one-director setup the standard model articles are fine and they come as a tick box during the application. Bespoke articles are for investors, multiple share classes, unusual voting arrangements. If you’re unsure whether that’s you, it isn’t.
Now file it. Straight through Companies House online is cheapest. Since 1 February 2026 the digital incorporation fee is £100, which is double what it was, and same-day filing costs £156. Paper is £124 and slow, so there’s no sensible reason to use it.Most companies come back inside 24 hours, often much faster than that. You get a certificate of incorporation as a PDF with your company number on it. That number is the thing your client in Reading actually wants.
One last piece arrives by post to your registered office: a six-character authentication code. Everything you file from then on goes through it. Save it somewhere you’ll still be able to find in eleven months, because eleven months is roughly when you’ll need it and also roughly when you’ll have forgotten where you put it.Formation agents will do all of the above for somewhere between twelve quid and a hundred on top of the fee. If you’re buying the registered address from them anyway, the bundle can work out reasonable. If you’re only buying convenience, you’re paying a stranger to type your own details in.
Then comes the boring week
The certificate isn’t the finish line, which is a slightly annoying thing to discover on day two.Open a business bank account. The company’s money has to be separate from yours, and no bank will let company income run through a personal current account under their terms anyway. App accounts like Tide, Starling or Monzo Business usually open in a day or two. High street banks take longer and ask more. Have your certificate and photo ID ready either way.
Register for Corporation Tax with HMRC within three months of starting to trade. Not three months from incorporation. Three months from actually doing business, which for most people is earlier. Your company UTR will already have been posted to the registered office, so keep that letter rather than deciding it looks like junk.PAYE if you’re paying anyone, including yourself. Register before the first payday.
VAT is turnover-driven. The threshold for 2026/27 is £90,000 of taxable turnover across any rolling twelve months, and that rolling part is what catches people, because you’re checking backwards every single month rather than at your year end. Cross it and you’ve got 30 days to register. You can also register voluntarily below the threshold, which is worth it if you sell to VAT-registered businesses and buy a lot of equipment, and a bad idea if you sell to the public and can’t quietly add twenty percent to your prices.
Last thing, and I’d put it above the others in terms of future misery avoided: pick your bookkeeping software in week one. Xero, FreeAgent, QuickBooks, whatever your accountant likes best. Setting it up now takes an afternoon. Setting it up in month ten means rebuilding ten months of receipts out of a shoebox and a bank feed while resenting your own past decisions.
Is it worth it? Do the sums on your phone
Rough test. Calculator app, five minutes. I’m not an accountant, so read this as a nudge rather than a verdict.
- Write down your expected profit for the next twelve months. Money in minus real costs, honest rather than optimistic.
- Take off £12,570 for the personal allowance.
- As a sole trader, most of what’s left in the basic rate band goes out at roughly 26p in the pound once you add income tax and Class 4 National Insurance.
- As a company: 19% corporation tax on the first £50,000 of profit, then dividend tax on whatever you take out, 10.75% at the basic rate for 2026/27 after a £500 allowance.
- Subtract accountancy fees. Realistically £70 to £200 a month for a small limited company, against maybe £400 to £700 a year for a sole trader return.
Where that tends to land: under about thirty grand of profit the saving is thin and the fees eat it. Thirty to fifty and it starts tipping. Above that it’s usually worth doing, though less dramatically than a few years back, since dividend rates went up again in April 2026.
And if a client won’t work with you unless you’re limited, none of the above matters. That contract is the reason.
Priya’s van
Priya runs mobile dog grooming out of a converted Transit around Watford. Sole trader for four years, no plans to change, doing fine off a Facebook group and word of mouth.
Then a pet insurance company with an office nearby asked her about staff perk days. Four Fridays a month, grooming employees’ dogs in the car park. Good money, predictable, exactly the work she’d been trying to find. Their supplier onboarding needed two things she didn’t have: a company registration number, and £2m public liability.
Nine days, start to invoicing. Most of that was waiting on identity verification and then the bank account. She called the company Bramble & Bay Ltd after her first spaniel, and says she’d have thought harder about it had she known it was going to end up on the side of the van in vinyl lettering.
Turnover last year was somewhere around £78,000, profit about £41,000. Her accountant charges £95 a month and reckons going limited saved her roughly £1,900 across the year. Real money. Not life-changing money. The corporate contract, meanwhile, was worth about fourteen grand. That’s the actual return on registering, and it had nothing to do with tax.
Her only complaint is that the admin never stops arriving. Confirmation statement, accounts, corporation tax return, VAT once she crossed the threshold, payroll for the part-timer she took on in January. Not hard, she says. Just relentless. Which is the most accurate description of running a limited company I’ve heard from anyone.
What a year of admin actually looks like
- Confirmation statement. Once a year, £50 online since February 2026, ten minutes of your life. Small catch with teeth: if a director hasn’t completed identity verification you can’t file it at all, and not filing a confirmation statement is an offence in itself.
- Annual accounts to Companies House. Nine months after your financial year end. First set is due 21 months after incorporation, which sounds generous and then arrives.
- Company tax return. Twelve months after the accounting period ends, except the tax itself is payable at nine months and one day. So you pay before you file. Yes, that’s the wrong way round.
- Payroll monthly if you’ve got one, VAT returns quarterly if you’re registered, and your own Self Assessment, because dividends don’t tax themselves.
Late filing penalties for accounts doubled from April 2026, so forgetting is more expensive than it used to be. Put every date in a calendar the same week you incorporate, with the reminder set a month early rather than a week.
Where it usually goes wrong
Home address on the register without a second thought, mostly. Then paying yourself by shifting money out whenever the balance looks healthy, with nothing recorded about whether it was salary, a dividend or a loan. Then never registering for Corporation Tax and finding out via a letter.
A quieter one: assuming your accountant handles the Companies House side. Plenty only do HMRC unless you specifically ask, and the confirmation statement sits there unfiled while both of you assume the other one’s on it. Ask. Get it in writing, or at least in an email you can find.
And the authentication code. Sounds trivial. Isn’t, at 9pm on the night something’s due.
One thing I’d say to anyone
Get a small accountant on a monthly plan before your first year end, not after it. Not a big firm, not a portal with a chatbot on it. Someone who picks up the phone.
That first year is where the habits get set, and the habits are what make the next five years either boring or expensive. Ninety-five quid a month to have a real human say “no, don’t put that through the company” is the best value in this entire process. Better value than any formation package, and much better than the six hours you’d otherwise spend reading forum posts from 2019 written by people who were also guessing.
Adnan’s fine, incidentally. Second year in, address sorted, still hasn’t changed the SIC code because it turns out nobody’s ever once asked him about it. Which is a decent summary of all this: two or three of the choices genuinely matter, most of them matter far less than they feel like they do at 11:40 on a Tuesday, and the only way to find out which is which is to get the thing registered.
FAQs
How long does it take to set up a limited company? The application is about twenty minutes and most companies are registered inside 24 hours. Identity verification is what really sets your timeline now, so do that first. Allow a week or so from cold start to sending your first invoice, longer if you need the bank account open before you can bill anyone.
How much does it cost to register a limited company in 2026? £100 online with Companies House since 1 February. Same-day digital is £156, paper is £124. Add £30 to £80 a year if you want a registered office address service.
Can I do it on my own? Yes. One person, sole director and sole shareholder. No company secretary needed, no second signature anywhere.
Do I really need a business bank account? Practically, yes. No specific law names it, but company money has to be kept separate from yours and no bank’s terms allow business income through a personal current account.
Can I use my home address as the registered office? You can. It’ll be published and it stays published, and changing it later means going back and doing the filing. Worth thinking about for two minutes before you file rather than paying to undo it.
What’s the difference between a director and a shareholder? Director runs it and carries the legal responsibility. Shareholder owns it and receives dividends. Usually the same person in a small company, but they’re separate roles with separate rules, and it matters the day you bring someone else in.
Do I need to register for VAT straight away? Only once taxable turnover passes £90,000 over any rolling twelve-month period, or if you expect to pass it in the next 30 days. Voluntary registration below that can make sense depending who your customers are.
How do I pay myself? Usually a small salary through PAYE plus dividends out of post-tax profit. The most efficient salary figure moves every April, so get your accountant to set it rather than lifting a number off a blog post. Dividends can only come out of actual profit, and technically each one needs a board minute and a dividend voucher, even when the board is just you at the kitchen table.
Can I change the name later? Yes, for a fee. Your company number never changes, and that’s what HMRC and the banks actually track. A trading name costs nothing to change.
What if I register and then never use it? File it as dormant, which means minimal accounts plus the confirmation statement each year, or close it with a voluntary strike-off. That dropped to £13 online in February 2026, so shutting an unused company down is cheap. Just don’t ignore it. A forgotten company still racks up penalties, and it’s a horrible letter to open two years later.
