Forming a company in the UK involves filing an application to incorporate (Form IN01) with Companies House (the Registrar of Companies) in accordance with the Companies Act 2006.
This guide explains the legal requirements and essential steps you need to take, including choosing a company name, appointing directors, issuing shares, and successfully completing the application process.
Step 1 – Choose a company structure
There are two types of private limited company structures to choose from, which are:
- Limited by shares
- Limited by guarantee
A limited by shares company is the most commonly used structure. It’s specifically designed for people who want to run a commercial (profit-making) business, either by themselves or with other people.
A limited by guarantee company is tailored more for non-profit enterprises and charities because there are no shares or shareholders. Thus, all surplus income is used to achieve the non-profit or charitable objectives of the company, rather than being paid to those who ‘own’ and control the company.
Alternatively, you can register a limited liability partnership (LLP), which is tailored to meet the needs of professionals who traditionally operate as partnerships, such as solicitors, dentists, and accountants.
Whichever type of company you require, it will be incorporated as a legal ‘person’. This means that the company:
- will be legally and financially independent of the directors and members
- can enter into contracts in its own name
- can own property and other assets
- will be liable for its own debts and any legal claims brought against it
This legal separation is one of the key benefits of running a business as a limited company or LLP rather than as a sole trader or traditional partnership.
Step 2 – Select a company name
One of the essential requirements of forming a company is selecting an official company name during the incorporation process. The name must be unique, so you can’t choose a name that any existing limited company is currently using.
It’s easy enough to check if the name you want to register is available. Simply enter it into our online name checker (found on our home page), which will automatically compare it against the official register of companies at Companies House and tell you whether it’s available to use.
Step 3 – Designate a registered office address
Next, you will need to choose an official company address, known as a ‘registered office’. This is where UK Government departments like HMRC and Companies House will deliver important letters and formal notifications, such as:
- information about registering for Corporation Tax and VAT
- reminders to file accounts, tax returns, and confirmation statements
- notice of late filing penalties
- important statutory updates
- legal notices
The location of your registered office is restricted to the country (or ‘jurisdiction’) where your new company is formed. This means that:
- if you incorporate a limited company in the UK jurisdiction of England & Wales, your registered office address must be in England or Wales
- if you incorporate a limited company in Scotland or Northern Ireland, the registered office has to be in Scotland or NI, respectively.
To find out everything you need to know about registered office address rules and requirements, be sure to read the following blog before forming a company: A Registered Office – What is it?
Step 4 – Confirm members, appoint officers, and identify PSCs
To register a company, you will need at least one member (shareholder or guarantor) and one director (officer). Directors are appointed by members (the owners of the company) to run the business on their behalf.
The same individual can be a director and member, meaning that you can set up a company on your own. Alternatively, you can have two or more directors and members if you want to own and run the business with other people. This is one of the numerous benefits of forming a company.
You will also have to identify all People with Significant Control (PSCs) who own or control the company. Typically, PSCs are also shareholders or guarantors.
Step 5 – Adopt articles of association
The articles of association is a key constitutional document that all limited companies must adopt and follow. Essentially, it is a rule book that regulates the way in which the company operates, including:
- the relationship between the company and its directors and members
- how shares are issued and transferred
- how decisions are made
- the procedures for appointing and removing directors
- directors’ responsibilities and powers
- payment of dividends
If you use a company formation agent, like Rapid Formations, they will provide articles of association for your new company, so you don’t need to worry about providing your own articles.
Step 6 – Specify share structure
If you are forming a company limited by shares, you will need to decide how many shares you would like to issue. You must issue at least one share, but there is no upper limit.
Shares determine how much of the company is owned by each member. For example:
- If you are the sole shareholder, you could issue one share to yourself, which would represent 100% ownership
- If you form the company with another person, you could issue two shares and take one each, which would result in both members owning 50% of the company
Whatever you decide, it’s important to understand that the ‘nominal’ value of the shares will determine your own financial liability to the company. Most shares are given a nominal value of just £1, but you can choose any amount – so, the more shares you issue, the higher your personal liability for company debts.
Our Guide to Limited Company Shares provides more information and will help you to decide how many shares to issue when forming a company.
Step 7 – Complete an application form
Whilst forming a company may seem like a complex affair, it’s really very straightforward if you incorporate through a trusted company formation agent like Rapid Formations.
All you have to do is select a company formation package and complete a simple online application form. If you need any help, our specialist team is on hand every step of the way to provide assistance.
To find out what details you need to provide on our company registration form, please refer to our Required information to Form a Company checklist.
Step 8 – Submit application to Companies House
Once you’ve entered all of the required information, your application will be reviewed by a member of our team (to check for mistakes or missing info) before being electronically delivered to Companies House. The Registrar will then carry out checks to verify the information provided before processing and approving your application.
All being well, your application should be approved within 24 hours, but oftentimes it’s much quicker. You will receive copies of your company formation documents, including the Certificate of Incorporation, the memorandum and articles of association, and share certificates for each member (if you register a company limited by shares).
At this time, you are free to begin trading through your new UK limited company.
Important steps to take after forming a company
As the director of a limited company, you have a legal duty to set up and maintain statutory company registers, which include:
- Register of Directors
- Register of Directors’ Residential Addresses
- Register of Secretaries
- Register of Members
- Register of People with Significant Control
- Register of Allotments (of shares)
- Register of Transfers (of shares)
- Register of Mortgages and Charges
Typically, these should be stored at the registered office. As standard, all of our company formation packages include digital company registers with first entries, so that’s one less task for you to worry about.
Register with HMRC for tax
When you start trading, you will have to register your company with HMRC for business taxes, including Corporation Tax, VAT, and PAYE. Additionally, each director and shareholder will likely be required to register for Self Assessment to report and pay tax on their untaxed income.
Reporting and filing obligations
Throughout the life of your company, you will have a number of filing and reporting obligations to fulfil, including:
- Filing an annual confirmation statement
- Delivering Company Tax Returns and accounts to HMRC
- Preparing annual accounts for Companies House
- Paying Corporation Tax (and VAT, if applicable)
- Filing annual Self Assessment tax returns to report your income
- Notifying Companies House and HMRC when certain company details change
- Keeping statutory company registers up to date
At Rapid Formations, we provide a range of corporate services to help company directors to keep on top of their administrative duties and run their businesses efficiently. These include VAT Registration, a Confirmation Statement Service, a Full Company Secretary Service, Business Banking, and Business Telephone Services.
Our Customer Service Team is available 24/7 at +44 20 7871 9990, to provide assistance and answer any queries you have about forming a company or using any of our other professional services.
