Ahead of Small Business Saturday (on 7 December 2024), we bring you a guide to setting up a new company. Find out how to set up a company, how to choose a company name, and what your legal obligations are as a new business owner.
How to set up a company
Is it possible to set up a new company myself?
Yes: you can set up a new company by sending an application to Companies House. This can be done online or by post.
Alternatively, you can have a company formation agent or solicitor to set up a company for you (see here for more information). It will, however, be cheaper if you do it yourself and, even if you use an agent or solicitor, you will still need to provide them with details about your new company.
For a table comparing these different methods of incorporation, see Comparison of different methods of incorporation. Whichever method you choose, our Starting a company toolkit contains everything you are likely to need.
How do I set up a new company?
Whether you choose to set up your company online or post, you will need to:
- Choose a name for your company (see more below)
- Choose a registered office
- Have a registered email address to receive Companies House correspondence
- Choose the right codes to describe your main business activities from a list on the Companies House website (known as SIC codes)
- Decide whether to have a company secretary
- Choose the directors for your company
- Decide how many shares you will have and who will own them
- Identify any people with significant control over your company
- Approve a memorandum of association for your company (see Memorandum of association and Template memorandum of association)
- Choose articles of association for your company. There are model articles that many companies use when first incorporating, although you can have a bespoke set of articles professionally drafted for you if you want.
- Complete and file an application form, either online or on paper
- Pay the necessary fee
It is also sensible, where you have more than one shareholder, to consider entering into a shareholders’ agreement at the time you set up your company. For guidance, see Shareholders’ agreements and for a template you can use, see Shareholders’ agreement. Our Shareholders’ agreement toolkit will take you through everything you need to know.
How do I set up a new company online?
You can set up a company online by completing and submitting an online form via Companies House. Your company will be registered for corporation tax at the same time.
The form can be edited, saved and completed in separate visits to the website. Once it has been submitted, your online application form will be reviewed by Companies House. If everything is in order, they will send you an email confirming that your company has been incorporated.
Companies House aims to process online applications within 2 working days. In many cases, online applications can be processed within 24 hours, but this is not guaranteed.
The fee for applying online is £50, cheaper than any other method.
For a step-by-step guide on how to set up a company online, see Step-by-step guide to incorporation (online). For information on how to set up a company by post, see our Q&A here.
How to choose a company name
A new company name can be registered with Companies House only if it:
- is not the same as another company’s registered name; and
- meets the minimum legal requirements about length, appropriateness and restricted terms.
In addition to these legal requirements, you should consider the following:
Do not steal someone else’s brand
Make sure your proposed name does not infringe on another company’s trade mark and is not used by another business as a trading name or brand. Companies House will not look at this, so it is important that you carry out your own searches and checks. See our Q&A here and here for more information.
You can use a different trading name
Beyond displaying your registered name at your registered office and in your business correspondence and stationery, you are free to use a trading name or brand name that differs from your registered name. Many companies label their goods or services under a different name to their registered company name.
You can change the name later
Your company is free to change its registered name at any time after incorporation, so you are not permanently tied to the name you choose. However, all previous names will be visible to anyone who views your company’s details on the Companies House public register. For further guidance, see Changing a company’s name.
If your name is your brand, think about other ways to protect it
Although registering a company name will stop another company from registering that name, it does not necessarily prevent another business from using that name in its branding, as a trading name, or as a domain. In order to fully prevent a competitor from using your chosen name, you will need to make further trade mark and domain name registrations. For further guidance, see Names and logos: Trade marks.
For a checklist of tests and practical checks you can carry out to ensure your company name meets the necessary legal requirements and is suitable for your business needs, see Checklist for choosing your company’s registered name.
Initial legal obligations for new businesses
There are several strict legal requirements during the early days of your company. It is important you keep these in mind as they can be easily missed, and it may constitute an offence if you fail to comply. Offences can result in fines being levied against the company itself and sometimes individual directors and others who are also found to be at fault.
File documents at Companies House
Your company must file annual accounts and a confirmation statement at Companies House every year, even if it is not trading or is dormant. For detailed guidance, see Annual filings, accounts and reports, and for a handy guide, see Quick guide to company books, records and filing.
Failure to do so is an offence resulting in an automatic fine. Continued failure can result in your company being struck off the register.
Keep proper records
Your company must set up several statutory registers (eg a register of directors and a register of people with significant control), and maintain proper company records (eg keeping minutes of general meetings and records of shareholders’ resolutions).
For further guidance, including template Company registers you can use for your company, see Maintaining a company’s books and records.
Failure to keep or maintain proper records is an offence punishable by a fine against the company and/or any officer at fault.
Register for corporation tax, PAYE and VAT
If you have not already, you must register your company with HMRC for:
- Corporation tax within three months of starting to do business;
- PAYE if your company takes on qualifying employees (see Setting up personnel systems for when and how to go about this); and
- VAT if your company’s sales that are subject to VAT cross the relevant threshold, which is currently £90,000 per annum.
It is often sensible for you to register for VAT straight away, even before you have crossed the VAT threshold, so that your company can claim back VAT on goods and services it buys. See our Q&A here for information on VAT registration.
Display your company’s details
Your company must display its registered name at its registered office and at any other place where it carries on business. For full guidance on these signage requirements, see What to do at a registered office.
Your company’s registered name and various other details, including its registered number and registered office, must also be set out on company correspondence and the company website. See Company stationery for full guidance.
The content in this article is up to date at the date of publishing. The information provided is intended only for information purposes, and is not for the purpose of providing legal advice. Sparqa Legal’s Terms of Use apply.
Becca joined Sparqa Legal as a Legal Editor in 2024 after transferring from FromCounsel. She previously worked as a caseworker at Advocate, the bar’s pro bono charity. Becca regularly writes for Sparqa’s blog, covering topics including employment, health and safety, intellectual property, and company law.