{"id":1270,"date":"2024-05-14T00:00:00","date_gmt":"2024-05-14T00:00:00","guid":{"rendered":"https:\/\/www.simplybusiness.co.uk\/knowledge\/business-structure\/setting-up-a-limited-company\/"},"modified":"2026-03-31T10:48:10","modified_gmt":"2026-03-31T10:48:10","slug":"setting-up-a-limited-company","status":"publish","type":"knowledge","link":"https:\/\/www.simplybusiness.co.uk\/knowledge\/business-structure\/setting-up-a-limited-company\/","title":{"rendered":"Setting up a limited company \u2013 a guide for new business owners"},"content":{"rendered":"\n<div id=\"cg_test_pre_gate\" class=\"wp-block-group is-layout-flow wp-block-group-is-layout-flow\">\n<p class=\"wp-block-paragraph\">Looking to set up a limited company but don&#8217;t know where to start? From choosing a name to preparing your documents and registering your company, we\u2019ve got you covered.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Setting up a new business is exciting and you might be raring to get to the fun stuff \u2013 but understanding the different legal structures and their benefits is a key step in finding business success.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">In this guide, we cover everything you need to know to set up your own limited company.<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li class=\"wp-block-list-item\"><a href=\"#what\">What is a limited company?<\/a><\/li>\n\n\n\n<li class=\"wp-block-list-item\"><a href=\"#how\">How to set up a limited company<\/a><\/li>\n\n\n\n<li class=\"wp-block-list-item\"><a href=\"#private\">What is a private limited company?<\/a><\/li>\n\n\n\n<li class=\"wp-block-list-item\"><a href=\"#why\">Why set up a limited company?<\/a><\/li>\n\n\n\n<li class=\"wp-block-list-item\"><a href=\"#how-much\">How much does it cost to set up a limited company?<\/a><\/li>\n\n\n\n<li class=\"wp-block-list-item\"><a href=\"#how-long\">How long does it take to set up a limited company?<\/a><\/li>\n\n\n\n<li class=\"wp-block-list-item\"><a href=\"#closing\">Closing a limited company<\/a><\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"what\"><strong>What is a limited company?<\/strong><\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">A limited company is a type of legal structure for your business. Limited companies:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li class=\"wp-block-list-item\">have a legal identity separate to that of its directors and shareholders (unlike sole traders)<\/li>\n\n\n\n<li class=\"wp-block-list-item\">are therefore able to take on more risk than sole traders, who are personally liable for business debts that build up when things go wrong<\/li>\n\n\n\n<li class=\"wp-block-list-item\">but setting up a limited company does come with added paperwork and responsibilities, making them time-consuming to run<\/li>\n<\/ul>\n\n\n\n<p class=\"wp-block-paragraph\">There are two types of limited company: public and private. Small businesses are usually registered as a private limited company as they\u2019re unlikely to be trading on the open stock market. We\u2019ll go over this more <a href=\"#private\">later in our guide<\/a>.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">You can also get private limited by guarantee, but that\u2019s only if you\u2019re setting up a not-for-profit organisation. And <a href=\"https:\/\/www.simplybusiness.co.uk\/knowledge\/business-structure\/what-is-a-limited-liability-partnership\/\" data-type=\"knowledge\" data-id=\"816\">limited liability partnerships<\/a> is an option if you\u2019ve set up a business partnership.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Here we look at how to set up a limited company, along with a limited company\u2019s benefits and costs.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"how\"><strong>How to set up a limited company<\/strong><\/h2>\n\n\n\n<figure class=\"wp-block-image size-large\"><img loading=\"lazy\" decoding=\"async\" height=\"870\" width=\"1024\" src=\"https:\/\/www.simplybusiness.co.uk\/wp-content\/uploads\/sites\/3\/2024\/06\/HowToSetupaLimitedCompany_Infographic_MC.webp?w=1024\" alt=\"\" class=\"wp-image-17153\" srcset=\"https:\/\/www.simplybusiness.co.uk\/wp-content\/uploads\/sites\/3\/2024\/06\/HowToSetupaLimitedCompany_Infographic_MC.webp 1271w, https:\/\/www.simplybusiness.co.uk\/wp-content\/uploads\/sites\/3\/2024\/06\/HowToSetupaLimitedCompany_Infographic_MC.webp?resize=800,680 800w, https:\/\/www.simplybusiness.co.uk\/wp-content\/uploads\/sites\/3\/2024\/06\/HowToSetupaLimitedCompany_Infographic_MC.webp?resize=768,653 768w, https:\/\/www.simplybusiness.co.uk\/wp-content\/uploads\/sites\/3\/2024\/06\/HowToSetupaLimitedCompany_Infographic_MC.webp?resize=1024,870 1024w, https:\/\/www.simplybusiness.co.uk\/wp-content\/uploads\/sites\/3\/2024\/06\/HowToSetupaLimitedCompany_Infographic_MC.webp?resize=150,127 150w\" sizes=\"auto, (max-width: 1024px) 100vw, 1024px\" \/><\/figure>\n\n\n\n<p class=\"wp-block-paragraph\">Follow these 7 steps (and questions to ask) when setting up a limited company.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-1-is-setting-up-a-limited-company-right-for-your-business\"><strong>1. Is setting up a limited company right for your business?<\/strong><\/h3>\n\n\n\n<p class=\"wp-block-paragraph\">You should work out whether you need to set up a limited company in the first place.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Being a sole trader is the most common legal structure for businesses in the UK. Between 2010 and 2025, the amount of sole traders <a href=\"https:\/\/www.gov.uk\/government\/statistics\/business-population-estimates-2025\/business-population-estimates-for-the-uk-and-regions-2025-statistical-release\" target=\"_blank\" rel=\"noreferrer noopener\" rel=\"noopener noreferrer\" target=\"_blank\">increased by 462,000<\/a> (17 per cent). However, in the same period, the amount of limited companies increased by 833,000 (66 per cent).<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">It\u2019s easy to set up as a sole trader and it comes with relatively few legal responsibilities, meaning it suits businesses that want to get started quickly.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">But as we\u2019ve already mentioned, sole traders have unlimited liability, which means they\u2019re personally liable when something goes wrong. Being a sole trader can also be less tax-efficient.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Think about the type of business you\u2019re setting up, and the risks involved. It\u2019s usually a good idea to get professional advice if you\u2019re not sure.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">You can learn more about whether you should set up your business as a <a href=\"https:\/\/www.simplybusiness.co.uk\/knowledge\/starting-out\/sole-trader-vs-self-employed\/\" data-type=\"knowledge\" data-id=\"1533\">sole trader or limited company<\/a> in our dedicated guide.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-2-how-do-you-choose-a-name-for-your-limited-company\"><strong>2. How do you choose a name for your limited company?<\/strong><\/h3>\n\n\n\n<p class=\"wp-block-paragraph\">As two separate limited companies can\u2019t have the same name, you\u2019ll have to come up with an original name for your business.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Keep in mind that Companies House won\u2019t allow anything offensive. They also have a <a href=\"http:\/\/www.formationsdirect.com\/sensitivewordsforlimitedcompanyformation\" target=\"_blank\" rel=\"noreferrer noopener\" rel=\"noopener noreferrer\" target=\"_blank\">list of sensitive words and phrases you can\u2019t use<\/a>.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Don\u2019t forget you\u2019ll need a digital presence so people can find your business. It\u2019s important to check whether the name is available to use as a URL (you can do this using a <a href=\"https:\/\/www.name.com\/domain\/search\" target=\"_blank\" rel=\"noreferrer noopener\" rel=\"noopener noreferrer\" target=\"_blank\">domain checker<\/a>).<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">As a limited company, your name will have \u2018ltd\u2019 after it (which is short for limited). If you don\u2019t want to use limited in your name, then you have to complete ltd registration by post.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">We also have a whole <a href=\"https:\/\/www.simplybusiness.co.uk\/knowledge\/starting-out\/how-to-register-a-business-name-uk\/\" data-type=\"knowledge\" data-id=\"1129\">guide to naming and registering your business<\/a> \u2013 which comes with some insight on what the UK public like in a business name.<\/p>\n\n\n\n<figure class=\"wp-block-image size-large\"><img loading=\"lazy\" decoding=\"async\" height=\"560\" width=\"1024\" src=\"https:\/\/www.simplybusiness.co.uk\/wp-content\/uploads\/sites\/3\/2024\/06\/SB-UK_BBBN_LandingPage_Stats.webp?w=1024\" alt=\"\" class=\"wp-image-17140\" srcset=\"https:\/\/www.simplybusiness.co.uk\/wp-content\/uploads\/sites\/3\/2024\/06\/SB-UK_BBBN_LandingPage_Stats.webp 1630w, https:\/\/www.simplybusiness.co.uk\/wp-content\/uploads\/sites\/3\/2024\/06\/SB-UK_BBBN_LandingPage_Stats.webp?resize=800,438 800w, https:\/\/www.simplybusiness.co.uk\/wp-content\/uploads\/sites\/3\/2024\/06\/SB-UK_BBBN_LandingPage_Stats.webp?resize=768,420 768w, https:\/\/www.simplybusiness.co.uk\/wp-content\/uploads\/sites\/3\/2024\/06\/SB-UK_BBBN_LandingPage_Stats.webp?resize=1024,560 1024w, https:\/\/www.simplybusiness.co.uk\/wp-content\/uploads\/sites\/3\/2024\/06\/SB-UK_BBBN_LandingPage_Stats.webp?resize=1536,841 1536w, https:\/\/www.simplybusiness.co.uk\/wp-content\/uploads\/sites\/3\/2024\/06\/SB-UK_BBBN_LandingPage_Stats.webp?resize=150,82 150w\" sizes=\"auto, (max-width: 1024px) 100vw, 1024px\" \/><\/figure>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-3-how-many-limited-company-directors-should-you-have\"><strong>3. How many limited company directors should you have?<\/strong><\/h3>\n\n\n\n<p class=\"wp-block-paragraph\">Every limited company needs at least one director (someone responsible for running the company), but there\u2019s no limit on the number of directors a company can appoint.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">When setting up a limited company, the director must be 16 or over and their responsibilities will range from legal to financial. The government website says that as a director you must:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li class=\"wp-block-list-item\">try to make the company a success, using skills, experience, and judgement<\/li>\n\n\n\n<li class=\"wp-block-list-item\">follow the company\u2019s rules shown in its articles of association<\/li>\n\n\n\n<li class=\"wp-block-list-item\">make decisions for the benefit of the company, not yourself<\/li>\n\n\n\n<li class=\"wp-block-list-item\">tell other shareholders if you might personally benefit from a transaction the company makes<\/li>\n\n\n\n<li class=\"wp-block-list-item\">keep company records and report changes to Companies House and HM Revenue and Customs (HMRC)<\/li>\n\n\n\n<li class=\"wp-block-list-item\">make sure the company\u2019s accounts are a \u2018true and fair view\u2019 of the business\u2019s finances<\/li>\n\n\n\n<li class=\"wp-block-list-item\">file a company tax return and pay corporation tax<\/li>\n\n\n\n<li class=\"wp-block-list-item\">register for Self Assessment and <a href=\"\/knowledge\/business-tax\/self-employed-tax-changes\/\" data-type=\"knowledge\" data-id=\"1514\">send a personal Self Assessment tax return<\/a> every year \u2013 unless you run a non-profit organisation (like a charity) and you didn\u2019t get any pay or benefits, like a company car<\/li>\n<\/ul>\n\n\n\n<p class=\"wp-block-paragraph\">Avoid these responsibilities and you could end up facing penalties and even prosecution, so make sure you\u2019re prepared to meet them before you incorporate.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-4-decide-on-your-shareholders\"><strong>4. Decide on your shareholders<\/strong><\/h3>\n\n\n\n<p class=\"wp-block-paragraph\">A limited company needs at least one shareholder. Shareholders can also be directors.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">As a small business, this might mean you will be the only shareholder. And if your business only has one shareholder, that shareholder owns 100 per cent of the company.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">That said, there\u2019s no limit to the number of shareholders a limited company can have.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">When you register your limited company, you need to give information about the shares and how they\u2019ve been issued. You should state:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li class=\"wp-block-list-item\">the number of shares and their total value (your company\u2019s \u2018share capital\u2019)<\/li>\n\n\n\n<li class=\"wp-block-list-item\">the names and addresses of your shareholders<\/li>\n<\/ul>\n\n\n\n<p class=\"wp-block-paragraph\">It\u2019s common for new small limited companies to issue 100 \u00a31 shares and pay \u00a3100 into the company bank account when incorporating.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">You can divide this if you have more shareholders. For example, if you have two directors, you can issue 100 \u00a31 shares, with both shareholders paying \u00a350 into the company bank account.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">This means the company is divided equally between the two shareholders, but you could also split it unevenly if you wanted to.<\/p>\n\n\n\n<h4 class=\"wp-block-heading\" id=\"h-what-is-a-person-with-significant-control\"><strong>What is a person with significant control?<\/strong><\/h4>\n\n\n\n<p class=\"wp-block-paragraph\">You need to identify the people with significant control (PSC) in your business and tell Companies House about them on your company\u2019s PSC register.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Companies House says PSCs are likely to be people who have:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li class=\"wp-block-list-item\">more than 25 per cent of shares in the company<\/li>\n\n\n\n<li class=\"wp-block-list-item\">more than 25 per cent of voting rights in the company<\/li>\n\n\n\n<li class=\"wp-block-list-item\">the right to appoint or remove the majority of the board of directors<\/li>\n<\/ul>\n<\/div>\n\n\n\n<div id=\"cg_test_gate\" class=\"wp-block-group is-layout-flow wp-block-group-is-layout-flow cg_test_gate\">\n<h3 class=\"wp-block-heading\" id=\"h-5-prepare-a-memorandum-and-articles-of-association\"><strong>5. Prepare a memorandum and articles of association<\/strong><\/h3>\n\n\n\n<p class=\"wp-block-paragraph\">These are the documents that say how you\u2019re going to run your limited company.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">The memorandum of association is the legal document that all your initial shareholders sign, agreeing to form the company. It\u2019s created automatically when registering your company online.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">The articles of association are written rules about running the company, agreed on by the directors and shareholders. You can use <a href=\"https:\/\/www.gov.uk\/guidance\/model-articles-of-association-for-limited-companies\" target=\"_blank\" rel=\"noreferrer noopener\" rel=\"noopener noreferrer\" target=\"_blank\">model articles<\/a> as a template, or create your own.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Check out our guide to<a href=\"https:\/\/www.simplybusiness.co.uk\/knowledge\/business-structure\/memorandum-of-association-template-free-download\/\" data-type=\"knowledge\" data-id=\"1483\"> memorandum and articles of association templates<\/a>.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-6-what-records-do-i-need-to-keep-when-running-a-limited-company\"><strong>6. What records do I need to keep when running a limited company?<\/strong><\/h3>\n\n\n\n<p class=\"wp-block-paragraph\">There are two types of records you need to keep:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li class=\"wp-block-list-item\">records about the company<\/li>\n\n\n\n<li class=\"wp-block-list-item\">financial and accounting records<\/li>\n<\/ul>\n\n\n\n<p class=\"wp-block-paragraph\">If you don\u2019t keep accounting records, you could be fined \u00a33,000 or disqualified as a company director, so it\u2019s important to know your responsibilities.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">The government website says that company records include information about directors, shareholders, and company secretaries, as well as:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li class=\"wp-block-list-item\">the results of any shareholder votes and resolutions<\/li>\n\n\n\n<li class=\"wp-block-list-item\">details of loans that the company has promised to repay at a date in the future (\u2018debentures\u2019) and who to pay them back to<\/li>\n\n\n\n<li class=\"wp-block-list-item\">the payments a company makes if something goes wrong and it\u2019s the company\u2019s fault (\u2018indemnities\u2019)<\/li>\n\n\n\n<li class=\"wp-block-list-item\">details of share transactions<\/li>\n\n\n\n<li class=\"wp-block-list-item\">details of loans or mortgages secured against the company\u2019s assets<\/li>\n<\/ul>\n\n\n\n<p class=\"wp-block-paragraph\">The government website says that financial and accounting records include information about all the money spent and received by the company, as well as:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li class=\"wp-block-list-item\">details of assets owned<\/li>\n\n\n\n<li class=\"wp-block-list-item\">details of debts the company owes or is owed<\/li>\n\n\n\n<li class=\"wp-block-list-item\">stock the company owns at the end of the financial year<\/li>\n\n\n\n<li class=\"wp-block-list-item\">stocktakings used to work out that figure<\/li>\n\n\n\n<li class=\"wp-block-list-item\">all goods bought and sold (and who from and to)<\/li>\n<\/ul>\n\n\n\n<p class=\"wp-block-paragraph\">You also need to <a href=\"https:\/\/www.simplybusiness.co.uk\/knowledge\/business-tax\/company-tax-return\/\" data-type=\"knowledge\" data-id=\"1430\">file a company tax return<\/a>, which involves calculations about your company\u2019s finances (including <a href=\"https:\/\/www.simplybusiness.co.uk\/knowledge\/business-tax\/what-is-business-turnover\/\" data-type=\"knowledge\" data-id=\"1577\">turnover<\/a>, profits, and tax reliefs). You should keep accurate financial records to make filing your company tax return as easy as possible.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Generally, the government says you should keep records for six years from the end of the last company financial year they relate to, but there are situations when you might need to keep them for longer. These include if you buy something that you expect to last for more than six years, or if you filed your company tax return late.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Read more about <a href=\"https:\/\/www.simplybusiness.co.uk\/knowledge\/business-tax\/how-long-to-keep-tax-records\/\" data-type=\"knowledge\" data-id=\"1407\">keeping accurate tax records<\/a>.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-7-incorporate-a-limited-company\"><strong>7. Incorporate a limited company<\/strong><\/h3>\n\n\n\n<p class=\"wp-block-paragraph\">You\u2019re now ready to register your company with Companies House, choosing an official address and <a href=\"https:\/\/www.simplybusiness.co.uk\/knowledge\/business-tax\/what-is-a-sic-code\/\" data-type=\"knowledge\" data-id=\"935\">SIC code<\/a> (the code that identifies what your company does \u2013 for example, 69102 is a solicitor).<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">You can register via the Companies House website from \u00a350, or through a variety of incorporation websites. Some accountants will even cover the cost for you as part of limited company accounting packages.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">When incorporating you\u2019ll need to provide Companies House with the residential address of each director, or a &#8216;service address&#8217; if you\u2019re keen to keep your details off the public register. You\u2019ll need to provide your registered company address and statement of capital, which is a description of the share structure of your new limited company.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Read more about <a href=\"https:\/\/www.simplybusiness.co.uk\/knowledge\/starting-out\/how-to-register-with-companies-house\/\" data-type=\"knowledge\" data-id=\"850\">registering with Companies House<\/a>.<\/p>\n\n\n\n<h4 class=\"wp-block-heading\" id=\"h-do-i-need-to-have-a-physical-office-address-to-register-a-limited-company\">Do I need to have a physical office address to register a limited company?<\/h4>\n\n\n\n<p class=\"wp-block-paragraph\">You can\u2019t set up a limited company without providing a <a href=\"https:\/\/www.simplybusiness.co.uk\/knowledge\/starting-out\/registered-office-address\/\" data-type=\"knowledge\" data-id=\"24721\">registered office address<\/a>, as this will be where all written communication is sent to you.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">This address needs to be a physical address in the UK \u2013 and you\u2019re no longer allowed to use a PO Box for this purpose.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">You also need to make sure that the address is in the same country you registered your business in. So if you registered your business in England, your registered address can\u2019t be in Scotland.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">This address will also be publicly available on the online register. So if you\u2019re using a home address where other people live, you might want to think about which address is best to use.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"private\"><strong>What is a private limited company?<\/strong><\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">This guide is about setting up a private limited company (as opposed to a public limited company).<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Businesses trading shares on the stock market (like the London Stock Exchange) must be public limited companies and are usually bigger firms with national or international recognition. This is because they must have a share capital of \u00a350,000 or more to be able to openly trade shares.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-private-limited-company-advantages-and-disadvantages-explained\"><strong>Private limited company advantages and disadvantages \u2013 explained<\/strong><\/h3>\n\n\n\n<p class=\"wp-block-paragraph\">As a small business you\u2019ll set up a private limited company if you decide to incorporate. This means you\u2019ll have a separate legal identity and can benefit from a more tax efficient business structure.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">While not as big as most public limited companies, there are many benefits to registering as a private limited company:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li class=\"wp-block-list-item\">private limited companies typically have fewer shareholders \u2013 meaning you\u2019re more in control of your business<\/li>\n\n\n\n<li class=\"wp-block-list-item\">private limited companies also face fewer regulatory requirements than public limited companies<\/li>\n\n\n\n<li class=\"wp-block-list-item\">you\u2019ll also have more privacy and confidentiality, as you won\u2019t be required to disclose as much information to the public<\/li>\n<\/ul>\n\n\n\n<p class=\"wp-block-paragraph\">However, there are some drawbacks too:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li class=\"wp-block-list-item\">you may have trouble <a href=\"https:\/\/www.simplybusiness.co.uk\/knowledge\/funding\/small-business-funding-and-investment\/\" data-type=\"knowledge\" data-id=\"18378\">raising funds<\/a>, as you\u2019ll have less choice when it comes to investors<\/li>\n\n\n\n<li class=\"wp-block-list-item\">it can also be harder to grow your private company, as you\u2019ll be competing with larger public companies<\/li>\n<\/ul>\n\n\n\n<p class=\"wp-block-paragraph\">Ultimately, your choice here will come down to how much control you want in your business, as well as your growth objectives.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"why\"><strong>Why set up a limited company?<\/strong><\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">There are a number of advantages of a limited company compared to being a sole trader:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li class=\"wp-block-list-item\">separate legal identity \u2013 this means the company is liable when things go wrong, not you personally. You\u2019ll only lose what you put into the business<\/li>\n\n\n\n<li class=\"wp-block-list-item\">more professional \u2013 some businesses might be seen as more professional by others in their industry when they operate as a limited company \u2013 it can make it easier to secure suppliers, <a href=\"https:\/\/www.simplybusiness.co.uk\/knowledge\/funding\/angel-investors-guide-for-small-businesses\/\" data-type=\"knowledge\" data-id=\"1020\">investment<\/a>, and eventually <a href=\"https:\/\/www.simplybusiness.co.uk\/knowledge\/management\/how-to-value-a-business\/\" data-type=\"knowledge\" data-id=\"1453\">sell the business<\/a><\/li>\n\n\n\n<li class=\"wp-block-list-item\">tax-efficiency \u2013 you pay <a href=\"https:\/\/www.simplybusiness.co.uk\/knowledge\/business-tax\/when-is-corporation-tax-due\/\" data-type=\"knowledge\" data-id=\"1592\">corporation tax<\/a> through your business and you can pay yourself in salary and dividends. Depending on your profits, this may be more tax-efficient than setting up as a sole trader<\/li>\n<\/ul>\n\n\n\n<p class=\"wp-block-paragraph\">But remember that being a sole trader means a simpler business structure, so it\u2019s important to carefully consider the extra responsibilities involved with limited companies and whether it\u2019s right for your business.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"how-much\"><strong>How much does it cost to set up a limited company?<\/strong><\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">There\u2019s a tangible monetary cost when setting up a limited company, but there are intangible ones too when comparing the structure with sole traders.<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li class=\"wp-block-list-item\">money \u2013 it costs \u00a350 to register your private limited company through Companies House online (and more by post), but if you\u2019re new to the process, you may want to hire an accountant or adviser to help with the paperwork<\/li>\n\n\n\n<li class=\"wp-block-list-item\">the day-to-day running of your business \u2013 this can cost money too, for example in continued professional advice, or software to keep accurate records<\/li>\n\n\n\n<li class=\"wp-block-list-item\">time \u2013 compared to sole traders, there\u2019s more legal responsibilities and administration to keep up with. It\u2019s important to work out whether being a limited company is necessary for the type of business you run<\/li>\n\n\n\n<li class=\"wp-block-list-item\">transparency \u2013 information about your limited company, including its directors and earnings, is publicly available online through Companies House<\/li>\n<\/ul>\n\n\n\n<p class=\"wp-block-paragraph\">Read more about <a href=\"https:\/\/www.simplybusiness.co.uk\/knowledge\/starting-out\/sole-trader-vs-self-employed\/\" data-type=\"knowledge\" data-id=\"1533\">the difference between a sole trader and a limited company<\/a>, or watch the video below.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-how-to-set-up-a-limited-company-online\"><strong>How to set up a limited company online<\/strong><\/h3>\n\n\n\n<p class=\"wp-block-paragraph\">To <a href=\"https:\/\/www.gov.uk\/limited-company-formation\/register-your-company?step-by-step-nav=37e4c035-b25c-4289-b85c-c6d36d11a763\" target=\"_blank\" rel=\"noreferrer noopener\" rel=\"noopener noreferrer\" target=\"_blank\">register a company online<\/a>, you just need to visit the UK government website and follow a few short steps. You\u2019ll also be registered for corporation tax at the same time (unless you\u2019ve already done this separately).<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">You should be registered within 24 hours of completing the online form.<\/p>\n\n\n\n<figure class=\"wp-block-embed is-type-video is-provider-youtube wp-block-embed-youtube wp-embed-aspect-16-9 wp-has-aspect-ratio\"><div class=\"wp-block-embed__wrapper\">\n<iframe loading=\"lazy\" title=\"Sole trader vs limited company (UK): what&#039;s the difference?\" width=\"500\" height=\"281\" src=\"https:\/\/www.youtube.com\/embed\/_g1xDdgb3d0?feature=oembed\" frameborder=\"0\" allow=\"accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share\" referrerpolicy=\"strict-origin-when-cross-origin\" allowfullscreen><\/iframe>\n<\/div><\/figure>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"how-long\"><strong>How long does it take to set up a limited company?<\/strong><\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">It doesn\u2019t take long to register your company with Companies House online. If you\u2019ve got everything ready, you can do it in a matter of minutes and you\u2019re usually registered within 24 hours. Postal applications take eight to 10 days.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">But it may take you some time to fill in the paperwork needed beforehand. Having a <a href=\"https:\/\/www.simplybusiness.co.uk\/knowledge\/strategy\/how-to-write-a-business-plan\/\" data-type=\"knowledge\" data-id=\"1199\">business plan<\/a> should help you organise your to-do list and work out how much time you need to get going.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-what-is-the-responsibility-of-a-company-director\"><strong>What is the responsibility of a company director?<\/strong><\/h3>\n\n\n\n<p class=\"wp-block-paragraph\">When you register your business with Companies House, you\u2019ll need to choose a company director. In most cases, the person who registers the limited company will also be the director.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">The role of a director in a company is important to understand, as they have legal duties that are unique to the position.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Some of these duties include:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li class=\"wp-block-list-item\">making sure the accounts are filed on time<\/li>\n\n\n\n<li class=\"wp-block-list-item\">informing Companies House if there\u2019s any change to your company\u2019s registered office<\/li>\n\n\n\n<li class=\"wp-block-list-item\">acting in the company&#8217;s best interests<\/li>\n\n\n\n<li class=\"wp-block-list-item\">avoiding any conflict of interest<\/li>\n<\/ul>\n\n\n\n<p class=\"wp-block-paragraph\">As the company director, you can hire people to help with these duties but it&#8217;ll ultimately fall to you to make sure these get done.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Here&#8217;s a full list of <a href=\"https:\/\/www.gov.uk\/guidance\/being-a-company-director\" target=\"_blank\" rel=\"noreferrer noopener\" rel=\"noopener noreferrer\" target=\"_blank\">company director responsibilities<\/a>.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"closing\"><strong>Closing a limited company<\/strong><\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">But what happens if you need to close your limited company? Luckily, it can be as simple as setting up a limited company. The first thing you need to do is make sure you have a company director appointed \u2013 if you don\u2019t currently have one, you\u2019ll need to appoint another.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">The next steps you take to close your business will depend on a few different circumstances:<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Can your company still pay its bills? If so, you can apply to be \u2018struck off\u2019 the Companies Register. This is often the easiest and cheapest way to close your business. However, you can also choose to liquidate your business instead.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">If your company can\u2019t pay its bills (meaning it\u2019s considered insolvent), you can do either of the two above options \u2013 or put your company into administration. With so many options, it\u2019s always best to seek professional advice to find the right fit for your circumstances.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">You can find out more about <a href=\"https:\/\/www.gov.uk\/closing-a-limited-company\" target=\"_blank\" rel=\"noreferrer noopener\" rel=\"noopener noreferrer\" target=\"_blank\">closing a limited company<\/a> on the government website.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Another option is to let your company become dormant. Your business will be considered dormant if it\u2019s:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li class=\"wp-block-list-item\">not carrying on business activity<\/li>\n\n\n\n<li class=\"wp-block-list-item\">no longer trading<\/li>\n\n\n\n<li class=\"wp-block-list-item\">not receiving income<\/li>\n<\/ul>\n\n\n\n<p class=\"wp-block-paragraph\">If you choose this route, your business will still be registered with Companies House.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-to-register-a-private-limited-company-or-not-is-up-to-you\"><strong>To register a private limited company (or not) is up to you<\/strong><\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">Ultimately, you\u2019ll need to decide if setting up a private limited company is right for you and your business. It depends on the type of work you\u2019re doing, the risks involved, and how much profit you\u2019re making.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">So take time to consider the decision carefully and think about the tax implications, possible benefits, as well as additional admin and responsibilities.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-useful-small-business-guides\"><strong>Useful small business guides<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li class=\"wp-block-list-item\"><a href=\"https:\/\/www.simplybusiness.co.uk\/knowledge\/business-tax\/what-is-bookkeeping\/\" data-type=\"knowledge\" data-id=\"1259\">What is bookkeeping? A guide for small businesses<\/a><\/li>\n\n\n\n<li class=\"wp-block-list-item\"><a href=\"https:\/\/www.simplybusiness.co.uk\/knowledge\/business-tax\/what-is-making-tax-digital\/\" data-type=\"knowledge\" data-id=\"1580\">What is Making Tax Digital?<\/a><\/li>\n\n\n\n<li class=\"wp-block-list-item\"><a href=\"\/knowledge\/business-tax\/self-employed-tax-changes\/\" data-type=\"knowledge\" data-id=\"1514\">Guide to Self Assessment tax returns for small businesses and the self-employed<\/a><\/li>\n\n\n\n<li class=\"wp-block-list-item\"><a href=\"https:\/\/www.simplybusiness.co.uk\/business-insurance\/faq\/is-public-liability-insurance-tax-deductible\/\" data-type=\"page\" data-id=\"590\">Is public liability insurance tax deductible?<\/a><\/li>\n<\/ul>\n<\/div>\n\n\n\n<div id=\"nba-upsell-001\" class=\"wp-block-group has-azure-200-background-color has-background has-global-padding is-layout-constrained wp-container-core-group-is-layout-94e519ba wp-block-group-is-layout-constrained\" style=\"padding-top:var(--wp--preset--spacing--80);padding-right:var(--wp--preset--spacing--40);padding-bottom:var(--wp--preset--spacing--80);padding-left:var(--wp--preset--spacing--40)\">\n<h3 class=\"wp-block-heading has-text-align-center\">Ready to set up your cover?<\/h3>\n\n\n\n<p class=\"has-text-align-center wp-block-paragraph\">As one of the UK&#8217;s biggest <a href=\"\/business-insurance\/\" data-type=\"page\" data-id=\"5152\">business insurance<\/a> providers, we specialise in <a href=\"\/business-insurance\/public-liability-insurance\/\" data-type=\"page\" data-id=\"734\">public liability insurance<\/a> and protect more trades than anybody else. Why not take a look now and build a quick, tailored quote?<\/p>\n\n\n\n<div class=\"wp-block-buttons is-content-justification-center is-layout-flex wp-container-core-buttons-is-layout-a89b3969 wp-block-buttons-is-layout-flex\">\n<div class=\"wp-block-button\"><a class=\"wp-block-button__link wp-element-button\" href=\"https:\/\/quote.simplybusiness.co.uk\/business\">Start your quote<\/a><\/div>\n<\/div>\n<\/div>\n\n\n\n<div id=\"nba-body-end\">\n<\/div>\n","protected":false},"excerpt":{"rendered":"<p>Read our step-by-step guide if you\u2019re researching how to set up a limited company, including the benefits of setting up a limited company and the costs.<\/p>\n","protected":false},"author":3,"featured_media":3851,"comment_status":"open","ping_status":"closed","template":"","meta":{"sb_hreflang":"","sb_hreflang_url":"","disable_breadcrumbs":false,"sb_breadcrumbs":[],"sb_reviewed_by":"rosanna-parrish","sb_review_date":"2026-01-27T12:18:20","sb_enable_content_gating":true,"footnotes":""},"categories":[336],"hidden-category":[],"coauthors":[26],"class_list":["post-1270","knowledge","type-knowledge","status-publish","has-post-thumbnail","hentry","category-business-structure"],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v27.2 (Yoast SEO v27.2) - https:\/\/yoast.com\/product\/yoast-seo-premium-wordpress\/ -->\n<title>Setting up a limited company \u2013 a guide for business owners<\/title>\n<meta name=\"description\" content=\"Wondering how to set up a limited company? 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