A Step-by-Step Guide to Forming a Limited Company

What You Need Before You Register Your Limited Company

Before you form a limited company, there are several key decisions and preparations to make. This step-by-step guide will help ensure you have everything in place and avoid common mistakes during the registration process.

Key Takeaways

• The first step is choosing the right company structure—limited by shares, limited by guarantee, or a limited liability partnership—as this affects ownership, profits, and tax obligations.

• Your company name must be unique, meet Companies House naming rules, and end with “Ltd”, “Limited”, or “LLP”, depending on the structure.

• Every company must appoint at least one director, and while a company secretary is optional, you must identify shareholders or guarantors.

• Core documents such as the memorandum and articles of association must be prepared to define your company’s structure and governance.

• You must provide a registered office address and select a SIC code that accurately describes your business activities.

• Using a professional company formation service can save time, reduce errors, and ensure your company is set up correctly from day one.

1. Choose the Type of Company You Need

Before registering, you must decide which company structure best suits your business.

All limited company structures operate as separate legal entities, meaning the company is legally distinct from its owners and directors. This differs from sole traders, who are personally liable for business debts.

The main types of limited companies are:

• Limited by Shares

• Limited by Guarantee

• Limited Liability Partnership (LLP)

Each structure affects how your business operates, how profits are distributed, and how the company is taxed.

Limited by Shares

This is the most common type of company in the UK. The business is owned by shareholders who hold shares and have voting rights on major company decisions. These companies are typically set up to make a profit.

Limited by Guarantee

Companies limited by guarantee are usually non-profit organisations. Instead of shareholders, they have guarantors who agree to contribute a small amount if the company is wound up. Profits are reinvested rather than distributed.

Limited Liability Partnership (LLP)

An LLP combines elements of partnerships and limited companies. It must have at least two members and is commonly used by professional firms such as accountants or solicitors.

2. Choose Your Company Name

Next, you’ll need to select a company name that complies with Companies House rules.

Your company name must:

• Be unique and not too similar to an existing company or trademark

• End with Ltd, Limited, or LLP, depending on the company type

• Avoid restricted or sensitive words unless permission is granted

It’s also worth noting that your registered company name can be different from your trading name.

Before registering, it’s recommended to check name availability using a company name checker.

3. Appoint a Director (and Optional Secretary)

Every limited company must have at least one director, who is legally responsible for running the company and ensuring compliance.

To be a director, you must:

• Be at least 16 years old

• Not be disqualified or banned from acting as a director

• Not be an undischarged bankrupt

A company secretary is optional for private limited companies and is often not required for small businesses.

4. Choose Your Shareholders or Guarantors

Your company must have at least one shareholder or guarantor, and this can be the same person as the director.

In small companies, it’s common for one individual to act as:

• Director

• Shareholder

• Person of Significant Control (PSC)

4a. Identify the Person of Significant Control (PSC)

A Person of Significant Control (PSC) is someone who has substantial influence over the company. This usually includes anyone who:

• Owns 25% or more of the shares

• Holds 25% or more of the voting rights

• Has the right to appoint or remove the majority of directors

Companies must keep PSC information accurate and up to date with Companies House.

Important update:
From 18 November 2025, companies will no longer be required to maintain internal registers of directors, secretaries, or PSCs. However, this information must still be filed with and kept current at Companies House.

5. Prepare Your Company Documents

To form a limited company, you must prepare two key documents:

• Memorandum of Association – confirms the intention of the shareholders or guarantors to form the company

• Articles of Association – outlines how the company will be run, including director responsibilities and decision-making processes

These documents are submitted as part of the incorporation process.

6. Register Your Company

The final step is registering your company with Companies House. This involves providing:

• A registered office address (this will appear on the public register)

• A SIC code that describes your business activity

Because the registered office address is public, many business owners choose a registered office address service to protect their privacy.

This stage is often where mistakes occur. Using a professional company formation service can help ensure everything is submitted correctly and efficiently, allowing you to focus on growing your business.

FAQs

What company structures can I choose from?

You can form a company limited by shares, limited by guarantee, or a limited liability partnership (LLP). Each structure suits different business needs and purposes.

What is a company limited by shares?

It is the most common UK company type, owned by shareholders and designed to make a profit.

What is a company limited by guarantee?

This structure is commonly used by non-profits and has guarantors instead of shareholders.

What is an LLP?

An LLP is a partnership with limited liability, typically used by professional firms with two or more members.

Do I need a director and secretary?

Every company must have at least one director. A company secretary is optional.

What is a PSC?

A Person of Significant Control is someone who owns or controls at least 25% of a company or has significant influence over it.

What documents are required?

You’ll need a memorandum of association and articles of association.

How do I register a limited company?

You must submit company details, officers, a registered office address, and a SIC code to Companies House. From 18 November 2025, all officers must also complete an ID verification.

Can I use my home address as a registered office?

Yes, but it will be publicly visible. Many business owners choose a registered office service for privacy and professionalism.