Complete Guide: Starting a Company in the UK
- Sunny Bajracharya
- Nov 5, 2025
- 17 min read
Updated: Dec 23, 2025

Starting a company in the UK is a straightforward process that can be completed in as little as 24 hours. The UK offers one of the most business-friendly environments in the world, with streamlined registration processes, competitive tax rates, and access to global markets. This comprehensive guide walks you through every step of setting up your UK company.
Step 1: Choose Your Business Structure
Choosing the right business structure is the foundation of your UK company setup and one of the most critical decisions you'll make as an entrepreneur. Your business structure affects everything: how much tax you pay, your personal liability, paperwork requirements, and how you can raise funding. Whether you're a freelancer, a start-up founder, or an established business owner, selecting between a sole trader, partnership, limited company, or LLP will have long-term implications for your success. Each structure has distinct advantages and disadvantages depending on your business goals, industry, income level, and growth plans. Making the wrong choice can cost you thousands in unnecessary taxes or expose you to personal financial risk.
Common Business Structures in the UK
Sole Trader | Partnership | Limited Company (Most Popular) | Limited Liability Partnership (LLP) |
|---|---|---|---|
Simplest form of business | Requires a partnership agreement (highly recommended) | Separate a legal entity from its owners | A hybrid between a partnership and a limited company |
You run the business as an individual | Business owned by 2 or more people | Can be owned by 1 person or multiple shareholders | Requires a minimum of 2 designated members (partners) |
You keep all profits after tax | Partners share profits and responsibilities | More tax-efficient | Taxed as a partnership (each partner pays tax individually) |
You're personally responsible for all debts | All partners are personally liable for business debts | Limited liability protection | Partners have limited liability protection |
Best for: Freelancers, small-scale operations | Best for: Professional services, family businesses | Best for: Growing businesses, solo entrepreneurs, multiple shareholders | Best for: Professional firms (accountants, solicitors, consultants) |
Recommendation
For most businesses, a Private Limited Company (Ltd) is the best choice due to liability protection and tax benefits. If you need help choosing the right business structure, don't hesitate to contact Red Parrot Accounting for expert guidance tailored to your needs.
Step 2: Choose a Company Name
Your company name is one of the most important decisions you'll make when starting your business in the UK. It's not just about branding and marketing – your company name must comply with specific legal requirements set by Companies House. The right name helps customers remember you, builds trust, and establishes your professional identity. However, choosing a name that's already taken or violates naming rules can delay your registration or even result in forced name changes later. This section covers everything you need to know about choosing a legally compliant, brandable company name that will serve your business well for years to come.
Rules for Company Name
✅ Must: | ❌ Cannot |
|---|---|
Be unique (not too similar to existing companies) | Be identical to an existing company |
End with "Limited" or "Ltd" (for limited companies) | Use certain protected words without approval |
Does not contain offensive words | Include certain symbols (& @ % *) |
Do not suggest a government connection without permission | |
Not be a "sensitive" word without permission (e.g., Royal, International, Bank) |
How to Check Name Availability for your Business
Official Tools: Companies House Name Availability Checker
Steps
Visit the link above
Enter your proposed name
Check if any similar names exist
Consider alternatives if needed
Tips for Choosing a Name
Please keep it simple and memorable
Make it relevant to your business
Check domain name availability
Check social media handle availability
Avoid numbers and hyphens if possible
Step 3: Prepare Required Information
Before registering your company with Companies House, it's essential to gather all necessary information and documents to ensure a smooth, error-free registration process. Having everything prepared in advance will help you complete your company formation quickly – often within 24 hours – and avoid delays or rejected applications
Information You'll Need
Company Details | Directors' Information | Shareholders' Information | People with Significant Control (PSC) | Memorandum and Articles of Association |
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Want a handy checklist you can print and tick off? Download our free Company Registration Checklist PDF to ensure you have everything ready before you start. This downloadable guide makes the preparation process simple and stress-free.
Important Notes
A director must be at least 16 years old
You can be both director and shareholder
You must have a UK-registered address (can use a formation agent address)
Directors' home addresses are kept private, but service addresses are public
Step 4: Register Your Company with Companies House
Registering your company with Companies House is the official legal process that establishes your business as a recognised entity in the UK. Companies House is the UK government's official registrar responsible for incorporating and dissolving limited companies, registering company information, and making that information available to the public. Every UK limited company, LLP, and certain other business structures must be registered here to operate legally.
While you can register your company yourself, many entrepreneurs choose professional assistance to ensure accuracy and compliance from day one. Red Parrot Accounting is an HMRC Authorized Agent and Authorised Corporate Service Provider specialising in seamless UK company formations. Our expert team handles your entire registration process, ensures all documentation is correct, and can have your company incorporated within hours – saving you time and eliminating costly mistakes
Registration Method
Online Registration | Postal Registration | Same-Day Registration | Red Parrot Accounting |
|---|---|---|---|
The Registrar of Companies, Companies House Crown Way Cardiff, CF14 3UZ | Completed same working day | HMRC Authorized Agent | Authorized Corporate Service Provider | |
Steps:
Go to the official GOV.UK website
| Steps:
| Steps:
| Steps 1. Call or WhatsApp on +44 7501 656 456 Or, 2. Email us at ashwin.nepal@redparrotaccounting.co.uk Benefits:
|
What Happens After Registration?
You'll receive:
Certificate of Incorporation - Official proof your company exists
Company Registration Number - Unique 8-digit number
Authentication Code - For online filing access
Step 5: Understand Your Legal Obligations
Congratulations on successfully registering your UK company! However, company formation is just the beginning of your journey as a business owner. Once your limited company is officially incorporated and registered with Companies House, you inherit a range of ongoing legal responsibilities, compliance obligations, and statutory duties that must be fulfilled to maintain your company's good standing.
UK company law requires all directors and companies to maintain accurate records, file annual returns, submit financial accounts, and keep Companies House and HMRC informed of any changes. Failing to meet these legal obligations can result in severe penalties, including hefty fines, director disqualification, or even company dissolution. Understanding and managing these responsibilities from day one is crucial for long-term business success and avoiding costly
A. Statutory Records You Must Keep
Register of Directors
Names, Addresses, Dates of Birth
Update within 14 days of changes
Register of Shareholders (Members
Names, addresses, share details
Update within 14 days of changes
Register of People with Significant Control (PSC)
Details of anyone controlling the company
Update within 14 days of changes
Minutes of Meetings
Records of all board meetings
Records of all shareholder meetings
Company Records
Copies of all filed documents
Written resolutions
Directors' service contracts
Where to Keep Records:
At your registered office, or
At another location (must tell Companies House)
Must be available for inspection
B. Annual Confirmation Statement
What is the Annual Confirmation Statement?
Annual update confirming company details are correct
The Annual Confirmation Statement (formerly called Annual Return) is a mandatory snapshot of your company's key information at a specific date each year. It confirms details like your registered office address, directors, shareholders, share capital, and people with significant control are accurate and up to date. This is a legal requirement for all UK companies, even if nothing has changed during the year, and ensures Companies House maintains current records about your business.
When to file the Annual Confirmation Statement?
Every 12 months from incorporation
You must file your first Annual Confirmation Statement within 12 months of your company's incorporation date, and then annually on the same date each year (your "review date"). For example, if your company was incorporated on 15th January 2024, your Confirmation Statement is due by 28th January 2025, and then every year on 15th January thereafter.
Cost to file the Annual Confirmation Statement
£13 (online) or £40 (paper)
What needs to be included when filing for the Annual Confirmation Statement?
Registered office address
Directors and secretaries
Shareholders
Share capital
PSC details
SIC codes
C. Annual Accounts
What are Annual Accounts?
Financial statements showing the company performance
Annual accounts are comprehensive financial records that detail your company's financial position, showing income, expenses, assets, liabilities, and overall profitability for the accounting period. These statutory accounts must be prepared in accordance with UK accounting standards and filed with Companies House (for public record) and HMRC (for tax purposes). Even if your company made no profit or had minimal activity, you're still legally required to prepare and file annual accounts.
When to file Annual Accounts?
Must file within 9 months of the financial year-end
You must file your annual accounts with Companies House within 9 months of your company's financial year-end date. For example, if your financial year ends on 31st March 2025, your accounts must be filed by 31st December 2025. Missing this deadline results in automatic penalties, starting at £150 and increasing significantly for repeated or longer delays.
Filling the first Annual Accounts of the company.
Due 21 months after incorporation
New companies get extra time for their first set of accounts. Your first accounts must be filed within 21 months of your company's incorporation date, or 3 months after your first accounting reference date (whichever is longer). This extended period gives new businesses time to establish their accounting systems and gather necessary financial information.
Types of Annual Accounts
Micro-entity accounts (simplified)
Small company accounts
Medium/Large company accounts
What must be included when filing the Annual Accounts?
Balance sheet
Profit and loss account (unless a micro-entity)
Notes to the accounts
Directors' report (unless micro-entity)
Step 6: Register for Corporation Tax
Corporation Tax is the tax that UK limited companies pay on their profits, and registering with HMRC for Corporation Tax is a mandatory legal requirement for all newly incorporated companies. Unlike personal income tax, Corporation Tax applies to your company's taxable profits, including trading profits, investment income, and capital gains.
You must register your company for Corporation Tax within 3 months of beginning to trade or conduct any business activity – not from your incorporation date. Failing to register on time can result in penalties and fines from HMRC, even if your company hasn't made any profit yet. Understanding when and how to register, what tax rates apply, and your ongoing Corporation Tax obligations is essential for maintaining compliance and avoiding unnecessary costs.
This section covers everything you need to know about registering for and managing your UK company's Corporation Tax responsibilities.
How to Register
Online Method | By Post Method |
|---|---|
Steps:
| Form CT41G can be downloaded and posted to HMRC |
Corporation Tax Rates (2024/25)
Main Rates | Small Profits Rate | Marginal Relief |
|---|---|---|
25% (for profits over £250,000) | 19% (for profits up to £50,000) | Available for profits between £50,000-£250,000 |
When to Pay Corporation Tax
Tax due 9 months and 1 day after the financial year ends
Must file tax return within 12 months of the financial year-end
File online through the HMRC portal
Step 7: Register for VAT (If Required)
VAT registration may be mandatory or optional, depending on your turnover. If your business turnover exceeds the UK VAT threshold (currently £90,000), you must register for VAT with HMRC. Even if your income is below this limit, voluntary VAT registration can still benefit you by enhancing business credibility and allowing you to reclaim VAT on expenses. Learn when and how to register for VAT in the UK, understand the requirements, and avoid penalties for late registration.
When VAT Registration is Mandatory | When VAT Registration is Optional |
You must register if:
| You can choose to register if:
|
How to Register for VAT
Methods of registering for VAT
Online
Through HMRC online services
By Post
Using form VAT1
By Phone
0300 200 3700
Information needed while filling in for VAT
Company registration number
Business bank details
Details of business activities
Estimated turnover
Date you want registration to start
Vat Rates
Standard Rate | Reduced Rate | Zero Rate |
|---|---|---|
20% (most goods and services) | 5% (e.g., children's car seats, home energy) | 0% (e.g., most food, books, children's clothes) |
VAT Schemes
Standard VAT Accounting | Flat Rate Scheme | Cash Accounting Scheme |
|---|---|---|
Charge VAT on sales | For businesses with turnover under £150,000 | Pay VAT when customers pay you |
Reclaim VAT on purchases | Charge customers standard VAT | Helps cash flow |
Submit returns quarterly | Pay HMRC a fixed percentage of turnover | Available for turnover under £1.35 million |
Step 8: Set Up Business Bank Account
A separate business bank account is legally required for limited companies.
Why do you need a business bank account?
Legal requirements for limited companies
Separates personal and business finances
Helps with accounting and tax
Looks professional
Easier to track expenses
Required for most business loans
Required documents for opening a business bank account.
Most banks require:
Certificate of Incorporation
Memorandum and Articles of Association
Proof of registered office address
Directors' identification (passport/driving license)
Directors' proof of address (utility bill)
Business plan (sometimes)
Tips for opening a business bank account
Compare multiple banks
Consider online banks for lower fees
Check international payment fees if trading abroad
Read reviews from other business owners
Some banks offer free accounting software integration
Step 9: Register as an Employer (If Hiring Staff)
If you plan to employ anyone (including yourself as director taking salary), register as employer.
How to register
Steps
Register online with HMRC
You'll need your company UTR and Government Gateway account
Provide the expected date of the first payment
HMRC sends your PAYE reference number
What do you receive?
PAYE reference number: For paying tax and National Insurance
Accounts Office reference number: For paying HMRC
Employer Responsibilities
1. PAYE (Pay As You Earn)
Deduct income tax from employees' wages
Send to HMRC monthly or quarterly
2. National Insurance
Deduct employee National Insurance
Pay employer National Insurance (13.8% on earnings above £175/week)
3. Workplace Pension
Auto-enrol eligible employees
Make minimum contributions
4. Payroll Software
Use approved software to report to HMRC
Submit RTI (Real Time Information) returns
Popular Payroll Software:
HMRC Basic PAYE Tools (free)
Xero
QuickBooks
Sage Payroll
Employment Allowance
Reduces the employer National Insurance bill
Worth up to £5,000 per year
Claimed through payroll software
Step 10: Get Business Insurance
Getting business insurance in the UK helps protect your company from financial risks, accidents, or legal claims. While not all types of insurance are legally required, essential covers like employers’ liability insurance, public liability insurance, and professional indemnity insurance can safeguard your business operations and reputation. Learn which business insurance policies you need to stay compliant and secure long-term stability.
Types of Business Insurance
Employers' Liability Insurance (MANDATORY) | Public Liability Insurance (Recommended) | Professional Indemnity Insurance | Commercial Property Insurance | Cyber Insurance |
Required if: You employ anyone | Covers: Injury to public or damage to property | For: Businesses giving advice or services | Covers: Buildings, contents, equipment | Covers: Data breaches, cyber attacks |
Minimum Cover: £5 million | Typical Cover: £1-5 million | Covers: Claims of negligent advice | Cost: Varies by property value | Increasingly important: For all businesses |
Typical Cost: £100-£300/year | Cost: £100-£500/year | Cost: £200-£1,000+/year | Often required: By landlords or mortgage lenders | Cost: £500-£2,000+/year |
What it covers: Employee injuries or illnesses | Required by: Many contracts and venues | Essential for: Consultants, accountants, IT professionals | ||
Fine for not having: £2,500/day |
Tips while doing business insurance
Shop around for quotes
Bundle policies for discounts
Review coverage annually
Read policy documents carefully
Declare all business activities accurately
Step 11: Set Up Accounting Systems
Setting up a business accounting system in the UK is crucial for financial compliance and growth. A reliable accounting system helps you manage cash flow, track expenses, file taxes accurately, and make informed decisions. Whether you use cloud accounting software like QuickBooks or Xero, or hire a professional accountant, proper setup ensures efficiency and compliance with HMRC requirements.
When choosing an accountant in the UK, always ensure they are an HMRC-authorised agent and an Authorised Corporate Service Provider (ACSP). Working with unauthorised accountants can lead to legal issues, compliance breaches, and costly penalties for both you and your business. Red Parrot Accounting is a fully authorised HMRC agent and ACSP, trusted by UK businesses for compliant and transparent accounting services.
What you need to track
Income | Expenses | Assets | Liabilities |
|---|---|---|---|
All sales and invoices | All business costs | Equipment and machinery | Loans and debts |
Payment dates and methods | Receipts and invoices | Vehicles | Outstanding bills |
Outstanding invoices | Mileage and travel | Property | Tax owed |
Office supplies | Depreciation |
Accounting Software Options
It's not compulsory to learn all the accounting software for your business, your accountant will take care of it. Some of the popular choices for accounting software are given below.
Xero | QuickBooks | FreeAgent | Sage | Wave |
Cost: From £12/month | Cost: From £10/month | Cost: From £19/month | Cost: From £14/month | Cost: Free (paid features available) |
Link: https://www.xero.com/uk/ | ||||
Best for: Small to medium businesses | Best for: Small businesses | Best for: Freelancers and contractors | Best for: Established businesses | Best for: Micro businesses |
Features: Invoicing, expenses, bank feeds, reports | Features: Easy to use, mobile app, payroll | Features: Time tracking, project management | Features: Comprehensive features, scalable | Features: Basic accounting, invoicing |
Making Tax Digital (MTD)
Starting April 2026, all UK limited companies must comply with Making Tax Digital (MTD) for Income Tax. MTD requires businesses to maintain digital records and submit tax returns through HMRC-approved accounting software. This digital system simplifies tax filing, reduces errors, and ensures real-time accuracy. Stay compliant by switching to MTD-compatible software early with support from Red Parrot Accounting.
Requirements
Keep digital records
Use compatible software
Submit quarterly updates to HMRC
Step 12: Licenses and Permits (If Applicable)
While registering your company with Companies House gives you the legal right to trade, many UK businesses require additional licenses, permits, or registrations depending on their specific industry, business activities, and location. Operating without the necessary licenses is illegal and can result in serious consequences, including heavy fines, criminal prosecution, forced business closure, and even imprisonment in severe cases. Business licenses in the UK are issued by various authorities – some by local councils, others by national government bodies, industry regulators, or professional organizations. The type of license you need depends on factors like what you sell, where you operate, whether you handle food or alcohol, employ staff in regulated sectors, or provide professional services.
Not all businesses need licenses, but it's crucial to check your requirements before you start trading. This comprehensive guide covers the most common UK business licenses and permits, who issues them, how much they cost, and where to apply, ensuring you operate legally and avoid costly penalties from day one.
Common Licenses and Permits
Alcohol License
Food Business Registration
Music License
Street Trading License
Waste Carrier License
HGV Operator License
Private Hire/Taxi License
Beauty/Therapy License
Professional Registration
Beyond general business licenses, certain regulated professions and industries in the UK require mandatory registration with professional bodies, regulatory authorities, or government agencies before you can legally operate. These professional registrations exist to protect the public, maintain industry standards, ensure practitioners meet minimum qualifications, and provide oversight of professional conduct.
Operating in a regulated profession without proper registration is a serious criminal offence that can result in prosecution, unlimited fines, and imprisonment. If your business involves providing professional services in healthcare, financial advice, legal services, construction trades, or other regulated sectors, you must register with the appropriate regulatory body and maintain your registration status through ongoing compliance, professional development, and regular renewals.
Some professions that require mandatory registration include:
Healthcare: CQC registration
Financial services: FCA authorization
Legal services: SRA authorization
Construction: Gas Safe, NICEIC, etc.
How to Check Requirements
Steps:
Enter your postcode
Select your business type
See required licenses for your area
Step 13: Protect Your Intellectual Property
Intellectual property (IP) represents the unique creations, innovations, and brand identity that set your business apart from competitors and provide genuine commercial value. Protecting your intellectual property rights in the UK is crucial for preventing competitors from copying your brand name, logo, inventions, designs, or creative content, and can be one of your business's most valuable assets. Without proper IP protection, you risk losing exclusive rights to your innovations, facing costly legal disputes, or watching competitors profit from your hard work and creativity.
UK intellectual property law offers several protection mechanisms, including trademarks for brands, patents for inventions, copyright for creative works, and design rights for product appearances. Understanding which types of IP protection apply to your business, how to register them, and the costs involved can safeguard your competitive advantage, increase your company's valuation, and provide legal recourse against infringement. This section explains all forms of intellectual property protection available to UK businesses, step-by-step registration processes, associated costs, and how to enforce your rights effectively
Types of Intellectual Property
Intellectual Property | Trademarks | Patents | Copyright | Design Rights |
|---|---|---|---|---|
What? | Protects your brand name, logo, and slogan | Protects inventions and innovations | Automatic protection for creative works | Protects the appearance of products |
Why? | Prevents others from using similar marks | Exclusive rights to make, use, and sell an invention | Books, music, art, software, databases | Prevents competitors from copying your product's visual design, shape, configuration, or decoration |
Cost | £170-£200 per class | £4,000+ (including professional fees) | Free (automatic) | £50 per design (registered) Free (unregistered - automatic) |
Duration | 10 years (renewable) | 20 years | Life of creator + 70 years | 25 years (registered) 10-15 years (unregistered) |
Steps |
| For the full steps, please look into
|
Your Foundation for UK Business Success
Congratulations! You've now learned the essential 13 steps required to properly establish and legally operate your company in the UK. By following this comprehensive guide, you're setting your business up for long-term success with a solid legal and financial foundation.
What You've Accomplished
By completing these initial steps, you have:
Chosen the right business structure that protects your personal assets and optimizes your tax position
Selected and registered a unique company name that represents your brand and complies with UK regulations
Gathered all necessary documentation to ensure smooth registration without delays
Successfully incorporated your company with Companies House, creating a legitimate legal entity
Understood your ongoing legal obligations to maintain compliance and good standing
Registered for Corporation Tax with HMRC, ensuring you meet tax deadlines and avoid penalties
Determined VAT requirements and registered if your turnover requires it
Opened a business bank account to separate personal and business finances properly
Registered as an employer if you're hiring staff or paying yourself a salary
Protected your business with appropriate insurance to mitigate risks and meet legal requirements
Established accounting systems to track finances, manage cash flow, and prepare for tax obligations
Identified and obtained necessary licenses to operate legally in your specific industry
Protected your intellectual property to safeguard your brand, innovations, and creative work
The Strong Foundation You Have Built
These 13 fundamental steps create the infrastructure every successful UK company needs. You've moved beyond just having a business idea to establishing a legitimate, compliant, and protected business entity. Your company is now:
Legally registered and recognized by UK authorities
Tax compliant with HMRC from day one
Financially organised with proper banking and accounting systems
Protected through insurance and intellectual property rights
Authorized to operate with all necessary licenses and permits
Ready to trade with confidence and credibility
Critical Success Factors Moving Forward
As you begin operating your business, remember these key principles:
Stay Compliant
Mark all filing deadlines in your calendar
Set up automatic reminders for annual obligations
File confirmation statements and accounts on time
Keep accurate records for at least 6 years
Maintain Good Financial Habits
Separate personal and business finances completely
Keep all receipts and invoices organized
Review financial reports monthly
Set aside money for tax bills in advance
Protect What You've Built
Maintain adequate insurance coverage
Update Companies House when changes occur
Protect your intellectual property
Keep statutory registers up to date
Seek Professional Guidance
Don't hesitate to consult accountants for tax planning
Use solicitors for complex contracts
Connect with business mentors and networks
Invest in professional advice when uncertain
Common First-Year Pitfalls to Avoid
Many new business owners stumble in their first year. Avoid these mistakes:
Mistakes | Consequences |
|---|---|
Missing filing deadlines | Results in automatic fines |
Mixing personal and business money | Creates tax complications |
Not keeping proper records | Makes accounting difficult |
Paying yourself incorrectly | Loses tax efficiency |
Operating without required licenses | Illegal and risky |
Ignoring GDPR requirements | Can result in huge fines |
Inadequate insurance coverage | Leaves you exposed |
When You Need Additional Support
While you've laid a strong foundation, remember that professional guidance can save you money and prevent costly mistakes:
Red Parrot Accounting is here to support your business journey. As an HMRC Authorized Agent and Authorized Corporate Service Provider, we offer:
Expert company formation services
Ongoing compliance support
Tax planning and optimization
Bookkeeping and accounting services
Payroll management
VAT return preparation
Annual accounts and tax returns
Our experienced team understands UK business regulations inside and out and can provide the guidance you need to thrive, not just survive.
Take Action Today
Don't let perfection be the enemy of progress. You now have the knowledge and roadmap to start your UK company. They say that "the best time to begin was yesterday; the second-best time is now."
Your business journey starts with a single step. Take it today.
Need personalized guidance for your specific situation?
Contact Red Parrot Accounting for expert support in establishing and growing your UK business. Their team is ready to help you succeed from day one.
Get in touch today and turn your business vision into reality.
Call Us/WhatsApp: +44 7501 656456
Email Us: ashwin.nepal@redparrotaccounting.co.uk
This guide is based on UK regulations as of November 2024. Tax rules and requirements change regularly. Always verify current regulations on official government websites and seek professional advice for your specific circumstances.
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