1. Introduction
Many entrepreneurs ask, “how easy is it to set up a limited company?” In the UK, the process is quicker and simpler than most people expect. Thanks to online systems, you can register your company within a day for a relatively low cost. This guide explains everything you need to know before starting.
2. What Is a Limited Company?
A limited company is a legal business structure where the business is separate from its owners. Shareholders and directors have limited liability, meaning they’re only responsible for company debts up to the amount they’ve invested.
3. How Easy Is It to Set Up a Limited Company in the UK?
It’s very straightforward. You can set up a company:
- Online via Companies House (takes as little as 24 hours).
- By post (takes 8–10 days).
- Through a formation agent (fast and includes extra services).
4. Steps to Set Up a Limited Company
Step 1: Choose a Company Name
- Must be unique and not too similar to existing company names.
- Check availability on the Companies House register.
Step 2: Decide on Directors and Shareholders
- At least one director is required.
- Shareholders own the company (can be the same person as the director).
Step 3: Prepare Documents
- Memorandum of Association – Confirms intention to form the company.
- Articles of Association – Rules for running the company.
Step 4: Provide a Registered Office Address
- Must be a UK address.
- Can be your home or accountant’s office.
Step 5: Register with Companies House
- Complete the application online.
- Pay the registration fee (£12 online or £40 by post).
Step 6: Register for Corporation Tax
- Must be done within 3 months of starting business activities.
5. Costs of Setting Up a Limited Company
- £12 (online registration).
- £40 (postal application).
- Additional costs if using an accountant or company formation agent.
6. Benefits of Setting Up a Limited Company
- Limited liability protection.
- More professional image than sole traders.
- Potential tax efficiency.
- Easier access to business loans and investment.
- Greater credibility with clients and suppliers.
7. Challenges to Consider
- More administration compared to sole traders.
- Annual filing requirements (confirmation statement, accounts, tax return).
- Directors have legal responsibilities and must follow regulations.
8. How Long Does It Take?
- Online application: 24 hours (sometimes same day).
- Postal application: Around 8–10 working days.
- Using an agent: Often same day.
Frequently Asked Questions
Q1: How easy is it to set up a limited company in the UK?
Very easy—most applications are completed online within 24 hours.
Q2: Do I need a business bank account to set up a limited company?
No, but it’s highly recommended to keep finances separate.
Q3: Can I set up a limited company on my own?
Yes, you only need one director and one shareholder (can be the same person).
Q4: How much does it cost to set up a limited company?
It costs £12 online or £40 by post via Companies House.
Q5: Do I need an accountant to set up a limited company?
Not for registration, but an accountant can help with tax and compliance.
Q6: What happens after I set up my limited company?
You’ll receive a Certificate of Incorporation and must register for Corporation Tax.
Conclusion
So, how easy is it to set up a limited company? In the UK, it’s simple, fast, and affordable. With just a few details and an online application, you can have your business registered in less than 24 hours. While it comes with more responsibilities than being a sole trader, the benefits of limited liability and professional credibility make it worthwhile for many entrepreneurs.