Registering a Limited Company in the UK: Is It Worth It?

What Is a Limited Company?

A limited company is a separate legal entity from its owners (shareholders) and directors. It pays Corporation Tax on its profits (25% for 2025/26), and directors extract profits through a combination of salary and dividends.

The "limited" in the name means limited liability — shareholders' personal assets are protected from business debts (in most circumstances).

How to Register

Step 1: Choose Your Company Name

Check availability on the Companies House website. Your name must end with "Limited" or "Ltd" and must not be identical or too similar to an existing company.

Step 2: Prepare Your Documents

You need:

• Memorandum of Association — confirms the subscribers wish to form a company
• Articles of Association — rules for running the company (you can use the standard model articles)
• Details of directors and shareholders — names, addresses, dates of birth
• Registered office address — your official address for HMRC and Companies House correspondence
• Share structure — how many shares and who holds them

Step 3: Register with Companies House

Register online at Companies House (£12 fee, usually processed within 24 hours) or by post (£40 fee, takes 8-10 days).

You receive a Certificate of Incorporation with your unique company number.

Step 4: Register for Corporation Tax

Within 3 months of starting to trade, register for Corporation Tax with HMRC. You will receive a company UTR.

Step 5: Set Up PAYE

If you will pay yourself a salary, register as an employer with HMRC and set up PAYE.

Ongoing Obligations

• File annual accounts with Companies House
• File a Confirmation Statement annually
• File a Corporation Tax return with HMRC
• Run payroll monthly (if paying salaries)
• File quarterly VAT returns (if VAT registered)
• Maintain statutory records

Is It Worth It?

Worth It If:

• Your profits consistently exceed £40,000-£50,000
• You want limited liability protection
• You can benefit from employer pension contributions
• You plan to reinvest profits in the business
• Clients or your industry expect it

Not Worth It If:

• Your profits are below £40,000
• You want simplicity
• You need all profits as personal income
• You work for mainly one client (IR35 risk)
• The additional accountancy costs outweigh the tax savings

For most people starting out, a sole trader structure is simpler and cheaper. You can always incorporate later if your business grows.

Start as a sole trader with Accounted and incorporate when the numbers make sense.

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Start simple, grow smart. Sign up for Accounted and let Penny manage your sole trader finances until you are ready for the next step.