Setting Up Your Company
When is the Right Time to Establish a Limited Company?
Determining the ideal moment to form a limited company can be challenging, but there are several factors to consider that will help you assess if your business is ready for this change.
A good starting point is to evaluate your business goals. Companies looking to expand or those seeking external investment might find that transitioning to a limited company is beneficial.
In contrast, sole traders focused on small-scale operations or personal service businesses may find that the extra legal responsibilities of forming a limited company outweigh the advantages.
Your business's financial health and revenue generation capabilities also play a key role. Businesses that generate consistent and sustainable income are better positioned to benefit from a limited company setup, as it suggests growth potential.
The cost of incorporation is another important factor. Setting up a limited company involves various fees, including incorporation, ongoing administrative costs, and possibly legal and accounting fees.
Ultimately, the best time to form a limited company is when your business is financially stable, poised for growth, and you’re prepared to manage the associated responsibilities.
A careful evaluation of your business goals and circumstances will guide you in making the right decision.
Can You Set Up a Limited Company by Yourself?
The Short Answer: Yes
Absolutely — many entrepreneurs choose to set up a limited company independently. In most cases, the individual acts as both the
sole director and shareholder. It’s a cost-effective, straightforward process, especially when done online.
How to Set Up a Limited Company
1. Choose the Type of Company
Decide whether you want to form a private limited company (Ltd) or a public limited company (PLC). Most small businesses choose a private company due to simpler regulatory requirements and lower costs.
2. Pick a Unique Company Name
Your company name must be:
- Unique and not already registered with Companies House
- Free of restricted or sensitive words (e.g. “Royal”, “Bank”)
- Reflective of your brand identity
3. Appoint at Least One Director
A company must have at least one director who is:
- Over 16 years old
- Not disqualified from being a director
Their appointment must be registered with Companies House.
4. Decide on Shareholders
You can be the sole shareholder or share ownership with others. Consider:
- Who will have voting rights
- Ownership percentages
- Whether to bring in investors or co-founders
5. Understand Record-Keeping Requirements
A limited company must maintain:
- Annual accounts
- Statutory registers (e.g. shareholders, PSCs)
- Corporation Tax records
- Confirmation statements
Accurate records are crucial for compliance.
Private vs Public Limited Company: What’s the Difference?
Private Limited Company (Ltd)
- Owned by a small group of shareholders
- Doesn’t offer shares to the public
- Less regulatory disclosure
- Ideal for small and growing businesses
Public Limited Company (PLC)
- Can list shares on a public exchange
- Subject to stricter reporting and transparency
- Better for raising large-scale investment
- Suitable for large, growth-focused firms
Costs of Setting Up a Limited Company
Typical Costs Include:
- Incorporation fee with Companies House (£12 online)
- Optional registered office address (for privacy)
- Accountant fees (often £50–£100/month)
- VAT compliance costs if you exceed the £90,000 threshold
- Software subscriptions (e.g. QuickBooks)
Using a formation agent or accountant can save time and help avoid mistakes.
How Long Does It Take to Register a Company?
- Online applications: Usually approved within 24 hours
- Paper applications: May take up to 10 working days
Having your name, SIC code, director/shareholder info, and address ready speeds up the process.
Thinking of Switching from Sole Trader to Limited Company?
If you're currently a sole trader, you can incorporate once your:
- Profits exceed £50,000+
- You want to limit personal liability
- You’re seeking tax efficiency
- You want a more professional or scalable structure
Key Benefits of Incorporating:
- Pay corporation tax instead of higher income tax
- Draw a mix of salary and dividends - check out our calculator
- Raise finance by selling shares
- Protect personal assets from business liabilities
Planning the Transition
Speak to an accountant before switching. You’ll need to:
- Register the company
- Notify HMRC you’re no longer a sole trader
- Transfer business assets (bank accounts, contracts, etc.)
Need Help Registering Your Limited Company?
At SBX Accountants, we specialise in helping small businesses and entrepreneurs register and run limited companies efficiently and compliantly.
✅
Company registration with Companies House
✅
Corporation Tax setup
✅
QuickBooks software included
✅ Fixed-fee monthly
accounting packages
✅ Unlimited support from your dedicated accountant
Ready to get started?
Contact SBX Accountants or book your free consultation now.
