Registering your limited company with Companies House

If you’re thinking of starting and running your own business, one of the first decisions you’ll need to make is to choose what type of business you want to be.

We’re not talking about the goods or the services you intend to make or offer, but the rules under which the business operates – the legal business structure.

In the UK there are several options, but two of the most common are a sole trader and a limited company.

You do not need to have a limited company to do business in the UK – many successful businesses operate as a sole trader.

If you’re a sole trader in the UK, you do not need to register with Companies House, but you still have certain legal obligations that you need to fulfil.

There’s plenty of guidance available for setting up as a sole trader and guidance on when to file and how to complete your self-assessment tax return.

If, however you want to set up a limited company instead then you’ll need to register your business with Companies House.

In this guide we’ve teamed up with Companies House to give you all you need to know about the process and an overview of your legal responsibilities.

Setting up a Limited Company

Starting a limited company can offer several benefits.

The main benefit is gaining limited liability protection, so the liability of the company’s shareholders to creditors of the company is limited to the money they originally invested.

A shareholder’s personal assets are protected in circumstances of company insolvency, but money they may have invested in the company may be lost.

Limited companies can often benefit from lower tax rates compared to sole-traders.

This is because Limited companies pay corporation tax on profits rather than personal income tax.

They may also be able to deduct certain expenses from their profits before paying corporation tax, which could help to reduce the overall tax bill.

Operating as a limited company could give your business a more professional image, which could help to attract customers, clients, and investors.

It may also allow access to certain government grants and support programs that are not available to sole traders.

Limited companies can issue shares to investors, making it easier to raise capital for the business which can help to fund growth and expansion plans.

Having a separate legal identity means that the company can continue to exist even if the shareholders change or pass away, offering greater continuity and stability to the business.

Starting a limited company also means taking on specific administrative and legal responsibilities, such as annual filings and complying with regulations.

It’s important to weigh the pros and cons before deciding if a limited company is the right choice for your business.

Learn more about setting up a limited company with our guide.

Legal responsibilities

If you decide to start and run a limited company, you’ll need to register with Companies House and make sure you understand your legal responsibilities.

You’ll need to provide information about your company, including its name, registered address, directors, shareholders, and people with significant control (PSCs).

The easiest way to register a company is online, following the step-by-step guidance on GOV.UK.

All limited companies in the UK including dormant and non-trading companies are required to file annual accounts with Companies House.

Annual accounts usually include a profit and loss statement, balance sheet, and notes to the accounts.

Your first set of accounts must be filed with Companies House within 21 months of the date of incorporation or three months from the accounting reference date, whichever is longer.

For following years, your usual deadline for filing your annual accounts will be nine months from the end of your company’s financial year accounting reference date.

All UK companies must also file an annual confirmation statement with Companies House.

This is a snapshot of your company data and confirms that the company’s information is up-to-date and correct each year.

You must file your confirmation statement at least once a year.

As well as these annual filings at Companies House, you must maintain statutory registers for your company, such as keeping a register of directors and a register of shareholders.

These registers must be kept up-to-date and available for inspection.

You must also report any changes to your company when they happen – such as changes to the company’s registered office, directors and their personal details, or person with significant control (PSC) information.

You also need to keep up to date with any changes in company law.

Seeking professional advice

Professionals such as business advisors, lawyers, and accountants, have a wealth of knowledge and experience that can be invaluable to someone who is starting a business.

They can provide advice on legal structures, taxation, financial planning, marketing, and other areas that are critical to the success of a business.

Starting a business can be a complex and challenging process.

By seeking professional advice, you can avoid common mistakes that new business owners often make, such as underestimating start-up costs or failing to properly structure the business.

Professionals also often have extensive networks that can be valuable for business owners.

They can introduce you to potential investors, partners, or customers, which can help your business grow and succeed.

Penalties and consequences

It’s important to note that although you can use others to help run your company on a day-to-day basis, it’s the directors of the company who are ultimately responsible for complying with legal requirements.

Directors who fail to comply with their responsibilities to Companies House can face various penalties and legal consequences which can include criminal charges, fines, and even imprisonment.