The Complete Guide To Setting Up Your Limited Company

A jargon free guide on how to open your limited company

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Updated on
May 28, 2024

Is setting up a limited company is right for you?

By registering your limited company, you protect your personal assets, and unlock potential tax benefits. Additionally, it adds credibility and trust in the eyes of clients and vendors.

Not sure if a limited company is right for you? 

Once you’ve decided a limited company is for you, you’ll need to follow the following steps. 

Quick Tip: If you’d like to join Mighty, we’ll handle all parts of the company formation process for you - ensuring everything is done correctly. Mighty specialises in accounting for freelancers and contractors - taking care of all your accounting needs quickly, easily and affordably.

Alternatively you will need to go through the following steps. 

How to register a limited company

You can register a limited company yourself with Companies House online at the GOV website. It only costs £12 with payment made directly to Companies House. You can pay this from your personal card.

Once you’ve registered you’ll get a certificate of incorporation, and your business will be legally recognised as a limited company. This is usually sorted within 24 hours. 

You will be registered for Corporation Tax at the same time as registering your business. There are a few more steps to take when registering with Companies House, which we will go through in detail below:

Details you need: 

When you register with Companies House, there are a few specific details you’ll need to share, including:

  • Your company name
  • Director’s details
  • Your business address

You’ll also need to supply three pieces of personal information to prove your identity. These can be anything from:

  • Your town of birth
  • Your father’s first name
  • Your National Insurance number
  • Your mother’s maiden name
  • Your passport number
  • Your phone number

Register your company name

The first thing you’ll need to decide is your limited company name. 

Your limited company name will be used on invoices and other official documents, but note that your limited company name can be different from your trading name. 

For example: if your brand name is LG Designs, your limited company name could be Amazing Style Limited. 

There is no wrong, or right when it comes choosing a limited company name. It can also be easily changed later.

Once you’ve decided on some options, go to the online Company Name Availability Checker at Companies House to see if your chosen name is available.

When you’ve selected a name, you can go ahead and click the link to register a ‘private limited company online'.

Confirming a company director

Every company must have at least one company director. If you’re a freelancer or contractor, this will be you. 

If you intend for there to be multiple company directors, you can also add their details.  

A company director is responsible for:

  • Setting and following the company’s rules
  • Keeping company records and reporting any changes
  • Keeping accurate financial records
  • Filing your accounts, and tax returns
  • Paying Corporation Tax

For clients of Mighty, all your financial records, accounts and tax will be taken care of for you. 

This may sound very formal but it's a requirement for operating a company. Remember the company is a separate legal entity to you as a shareholder or employee of the business. 

The director manages the company, the shareholder receives the profits and the employee works for the company. As a freelancer or contractor, you’re likely to be all three. That’s perfectly normal

Company Secretary

You also have the option to appoint a secretary, who makes sure the admin side of your business runs smoothly. 

Most freelancers will not appoint company secretaries as there is no real need. For clients of Mighty, all company administrative work will be taken care of for you and easily doable yourself. 

Allocating shares

Limited companies are made up of shares. Each ‘share’ represents a percentage of your company and if you are a shareholder, you have certain rights. 

When setting up as a limited company, you must have at least one shareholder. If you’re the only one who owns shares in the company, that means you own 100% of the business. As a freelancer, it is very typical for you to own 100% of the business. 

If you’re the only shareholder we recommend issuing 1 share with £1 of share capital. However you could issue any allocation of shares e.g. 4 shares with £400 of share capital. In this case each share would be worth £100. 

‘Person with Significant Control’ is defined as a shareholder that has more than 25% in your company. Typically, most companies will have at least one person who has significant control over the company which means that they’ll be able to control things like:

  • Ownership of shares
  • Voting rights
  • Removing or appointing the board of directors

Memorandum of association

As part of forming a limited company you will need to agree to A ‘memorandum of association’ and ‘Articles of association’, but what the hell are they 

A ‘memorandum of association’ is a legally binding statement signed by all shareholders and guarantors agreeing to form the company.

‘Articles of association’ - These are rules about running the company agreed by the shareholders, guarantors, directors, and the company secretary (if you have one).

If you are registering as a limited company online, you can choose to use Companies House’ model ‘Articles of association’ with the ‘memorandum of association’ automatically created for you. This is what we’d recommend for any freelancers or contractors.  

SIC Code

You must choose a Standard Industrial Classification Code, which is also known as a SIC code. This is a unique number that details what your company does and what sector it fits into.

You can search to find the best SIC code for your business on the Companies House website here

In reality SIC codes rarely perfectly fit your exact business, simply choose one that feels close enough. Your SIC code can always be changed later if your business materially changes the type of work it undertakes. 

Company Address

Once all this is sorted, you’ll need to provide a registered address. This address will be where Companies House and HMRC post your company formation documents, and future correspondence to. 

This can be your company premises or if you don’t have one, a home address. Whatever address you choose, make sure it is one you can confidently have access to. 

You can always change your address so if you move office or home, this is not a problem. One point to note is that this address will be publicly visible on the Companies House website, so if you are not comfortable showing your address you may wish to use a virtual address. 

If you choose to register with Mighty, we offer this service for you as part of forming your company and becoming a client. 

What numbers & documents you’ll receive: 

Once registered, you’ll be given the following numbers: 

  • Company Registration Number (CRN) – Your CRN will be eight digits long and is issued when you register as a limited company with Companies House. You’ll usually receive this within 24 to 48 hours, confirming your company is officially registered. 
  • Unique taxpayer reference (UTR) – Issued by HMRC, this number will be 10 digits long and is used to identify your company for anything tax-related. You’ll receive this in the post within 2 weeks of registering your company. 

What happens once your business is registered?

When your business is registered, HMRC will have you on record as an official business. You can start trading and issuing invoices under the business name as soon as you get confirmation from Companies House.

This means you can also now open a business account in your business name, as it is critical your business and personal finances remain separate. 

As part of operating a limited company it is a legal requirement to keep organised financial records, calculate your tax and file everything on time to HMRC and Companies House. Mighty makes managing all your accounting fast, easy and affordable.

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