Forming a limited company at Companies House for £50

Starting your own limited company in the UK is an exciting step, but many founders feel daunted by the legal jargon and administrative tasks involved. The good news is that forming a limited company at Companies House is a straightforward process that can be completed online in around 12 minutes, for just £50. This guide will walk you through the essential steps — from picking your SIC code to setting your share structure and understanding the PSC register — so you start your business on a solid legal foundation.

Why Form a Limited Company?

A limited company is a popular business structure in the UK, offering benefits such as limited liability, potential tax efficiencies, and a professional image. Unlike sole traders or partnerships, a limited company is a separate legal entity from its owners, meaning your personal assets are usually protected if things go wrong. Additionally, limited companies can raise capital more easily and may find it simpler to secure contracts with larger clients.

However, forming a limited company comes with responsibilities, including filing annual accounts and confirmation statements with Companies House, maintaining statutory registers, and ensuring accurate tax returns to HMRC. Knowing what to expect upfront will help you avoid surprises and focus on building your business.

Step 1: Preparing to Incorporate

Before you start the online incorporation process, gather some basic information. This preparation will help you complete the form quickly and accurately. Here’s what you need to have ready:

• Company name: Check availability on the Companies House register to avoid duplicates or restricted words.
• Registered office address: This must be a physical UK address (not a PO Box) where official correspondence can be sent.
• Details of directors: Full names, dates of birth, service addresses, and personal addresses (the latter can be kept off the public register).
• Shareholders and share allocation: Decide who owns the company and how many shares each person holds.
• SIC code(s): Select the appropriate Standard Industrial Classification code(s) that describe your business activities.
• People with Significant Control (PSC): Identify who has control or significant influence over the company.

Taking the time to understand these elements will speed up incorporation and ensure your company’s records are compliant with UK law. For example, choosing an appropriate SIC code is more important than many founders realise, as it determines how your business is classified for official statistics and may affect eligibility for certain grants or contracts.

Step 2: Choosing Your SIC Code(s)

SIC codes are numerical codes used by Companies House and HMRC to categorise your business activities. When incorporating your company, you must select at least one SIC code that best describes what your business does. You can add up to four SIC codes if your company operates across multiple sectors.

For example, if you’re setting up a digital marketing agency, you might select 73110 (Advertising agencies). If you’re running a consultancy business, 70229 (Management consultancy activities other than financial management) might be more appropriate. You can find a full list of SIC codes on the Companies House website or via the Office for National Statistics.

Selecting the right SIC code matters because it affects how your company is recorded in official statistics and can influence your relationship with bodies like HMRC and banks. Some funding schemes or industry-specific regulations rely on SIC codes to determine eligibility, so accuracy here can pay dividends later.

Step 3: Setting Your Share Structure

When you incorporate, you must decide on your company’s share structure. This determines how ownership is divided among shareholders and sets out their rights. Most simple startups begin with ordinary shares of equal value, but understanding the options available can help you tailor ownership for your needs.

A standard approach is to create 100 ordinary shares, each with a nominal value of £1, and allocate them among shareholders according to their investment or agreement. For example, if you and a co-founder want to split ownership 50/50, each of you would hold 50 shares. Alternatively, if you’re the sole founder, you might issue all 100 shares to yourself.

You can also create different classes of shares (such as A and B shares) with distinct rights, like voting power or dividend entitlements. This is useful if you plan to bring in investors or want to retain control while offering economic benefits to others.

Step 4: Understanding the PSC Register

The People with Significant Control (PSC) register is a legal requirement introduced to improve transparency around company ownership. You must identify and record individuals or entities that hold significant control or influence over your company. This includes people who:

• Hold more than 25% of shares
• Hold more than 25% of voting rights
• Have the right to appoint or remove a majority of the board of directors
• Exercise significant influence or control over the company
• Exercise significant influence or control over a trust or firm that meets one of the above conditions

These details must be kept up to date and filed with Companies House annually or whenever there is a change. The PSC register is publicly accessible, except for some personal details which are protected for privacy reasons.

For most small startups, the PSC register is straightforward — usually the founders themselves are the PSCs. However, if you have complex ownership or investors, it’s essential to keep this register accurate to comply with the law.

Step 5: Completing the Online Incorporation

Once you’ve gathered all the necessary information, you can incorporate your company using the Companies House Web Incorporation Service. The process is designed to be quick and user-friendly:

1. Access the Companies House online incorporation service at their official website.
2. Enter your proposed company name and check availability.
3. Provide the registered office address, ensuring it is a physical UK address.
4. Add details of directors, including their personal and service addresses.
5. Specify shareholders and allocate shares according to your planned share structure.
6. Select your SIC code(s) to classify your business activities.
7. Complete the People with Significant Control (PSC) section.
8. Review and confirm all details before submitting your application.
9. Pay the £50 incorporation fee with a debit or credit card.

If everything is in order, Companies House usually processes the application the same day, often within minutes. You’ll receive an email with your Certificate of Incorporation, which is your company’s birth certificate and proof it legally exists.

After Incorporation: Next Steps

After your limited company is incorporated, several important tasks follow. You need to register for Corporation Tax with HMRC within three months of starting to trade. You’ll also need to maintain your company’s statutory registers and file annual confirmation statements and accounts on time to avoid penalties.

Setting up a business bank account is strongly recommended, as it keeps your company’s finances separate from your personal money, which is crucial for limited companies. Many UK banks offer accounts tailored to startups, and some fintech platforms provide streamlined digital banking options.

Finally, keep clear records of company activities, invoices, and expenses. HMRC may request this information during tax assessments or audits, so good bookkeeping from day one is essential.

"“Incorporating my company online was surprisingly quick and straightforward — I had everything done in under 15 minutes and saved hundreds of pounds by not using an agent. The key is preparation and understanding the key pieces like SIC codes and PSCs.” – Emma R., founder of GreenTech Solutions Ltd"

Summary: Your 12-Minute Incorporation Checklist

• Choose a unique company name and check it on Companies House.
• Prepare your registered office address and director information.
• Select accurate SIC code(s) to describe your business activities.
• Decide on your share structure and allocate shares accordingly.
• Identify your People with Significant Control (PSC).
• Use the official Companies House online service to apply for incorporation.
• Pay the £50 fee and download your Certificate of Incorporation.
• Register for Corporation Tax with HMRC and open a business bank account.
• Maintain statutory registers and keep on top of filing deadlines.

Forming a limited company may seem intimidating at first, but with the right preparation and understanding, you can complete the process quickly and confidently. Starting your business properly sets the tone for future success, compliance, and growth.