Considerations when looking to set up a Company

3 Apr

Starting a business in the UK is an exciting journey, but it requires careful planning and compliance with legal and financial obligations. Whether you're launching a side hustle or planning to build a large enterprise, this guide outlines the key steps and considerations to help you get started on the right foot.

Before anything else, choose the structure that suits your business goals:

Sole Trader: Easiest to set up, but you’re personally liable for debts.
Limited Company: Offers limited liability, more credibility, but more admin and compliance.
Partnership: Suitable for two or more people starting a business together.
LLP (Limited Liability Partnership): Combines features of a partnership with limited liability.

For most new businesses seeking protection and professionalism, a limited company is the preferred option however if you’re unsure, this is something we can look to assess with you as starting as a sole trader typically works better from a financial point of view initially.

1. Register with Companies House

If looking to create a limited company then you’ll need to register with Companies House. For this, you’ll need to establish your Company name, the directors/shareholding of the business along with proportion of the share structure that you want in place.

You’ll also need to set up stated articles of association for the business at least or look to get tailored AoAs via a solicitor if the standard wording doesn’t seem sufficient, again - we can assist you with this.

Lastly, Companies House does charge a fee for registering the company, that being £50 for online registration (paper registration cost more!)

2. Register for Taxes with HMRC

Once your company is set up, you must register for Corporation Tax (required for all limited companies). You may also need to register for VAT if your turnover exceeds £90,000 or if you choose to register voluntarily. If you plan to hire employees, you’ll also need to register for PAYE (Pay As You Earn) to manage income tax and National Insurance contributions.

3. Register with the Information Commissioners Office (ICO)

Be sure to register with the ICO and pay the initial fee. They have a free tool on their website to also consider if you’re exempt from having to register and pay the annual fee.

4. Open a Business Bank Account

If you’ve set up a limited company, having a separate business bank account is a legal requirement. Even for sole traders, it’s good practice to separate personal and business finances. When choosing a provider, compare account features, fees, customer support, and how well it integrates with your accounting software.

5. Set Up Accounting & Record-Keeping

Good financial management starts with choosing the right bookkeeping software, such as Xero, QuickBooks, or FreeAgent. You’ll need to keep accurate records of all income, expenses, and key company decisions. Staying organised ensures you can file your annual accounts and tax returns on time, avoid penalties, and make informed business decisions.

6. Understand Ongoing Responsibilities

Running a limited company comes with ongoing legal and financial duties. You must file a confirmation statement with Companies House each year to keep your company information up to date. Stay on top of tax obligations, including Corporation Tax, VAT, PAYE, and any dividend payments made to shareholders. When paying dividends, it's essential to prepare proper dividend vouchers and record supporting board meeting minutes. Additionally, maintain accurate statutory records and ensure ongoing compliance with company law.