Company Incorporation in the UK: A Complete Guide
- Modified: 7 November 2025
- 15 min read
- Starting a Company
Jon Mills
Author
Jon relishes writing content that both educates and entertains the reader. With a background in copy and content writing for brands, he's told unique stories in creative ways, adding value to products in the luxury sector. Now, he works with our accounting experts and small business owners to bring their advice and journeys to life for Osome's readers. He aims to inspire ambitious entrepreneurs to set their sights high, and build highly-respected, flourishing businesses.
Company incorporation is perhaps the most exciting part of any entrepreneurial journey. This is where it starts. You've got an idea, a product, a dream – but first, you need to do the company formation paperwork.
Understanding Company Incorporation in the UK
Company incorporation in the UK is the legal process of forming a new company as a separate legal entity from its owners. This involves registering the company with Companies House, the official register of companies in the UK. Once incorporated, the company is recognised as a distinct legal entity, meaning it can enter into contracts, own property, sue, and be sued in its own name.
One of the most popular company structures in the UK is a limited company. A limited company is a beneficial structure for entrepreneurs because it is completely separate from the owner. The risk to the owner is limited, meaning any debt, losses, or legal claims associated with the company are not personally their responsibility.
To simplify the process, Osome offers comprehensive company formation packages that make it easy to register a company and start your business journey with confidence.
The company exists as a distinct legal entity with its own business bank account and registered office. Essentially, a limited liability company is a 'person' in its own right.
In contrast, many people in the UK operate as sole traders, where the business and the owner are the same legal entity. A limited company clearly separates the individual from their business.
Forming a company offers significant benefits but also involves more administrative work. It’s a trade-off, but one worth making if you are serious about growing your business long-term.
How to Incorporate a Company in the UK?
Incorporating a company in the UK means registering it as a limited liability company with Companies House, creating a separate legal entity that protects owners’ personal assets. This structure adds credibility, attracts investors, and limits personal risk — making it one of the most popular choices for entrepreneurs.
1 Choose and register a company name
Select a unique company name that reflects your business. The name must not already exist on the Companies House register or contain restricted terms suggesting government, royal, or charitable connections. Offensive or misleading words are not allowed.
2 Define the principal business activity (SIC Code)
Identify your company’s main business activity using a Standard Industrial Classification (SIC) code. At least one SIC code is required during registration, though up to four can be added if the company operates in multiple sectors.
3 Provide a registered office address
Every UK company must have a physical registered office within its jurisdiction (England and Wales, Scotland, or Northern Ireland). This address will appear on the public register and receive all official correspondence. A PO box cannot be used, but your accountant’s or adviser’s address may serve this purpose.
4 Appoint company officers
Appoint at least one director to manage the company. Directors can be UK residents or foreign nationals. While appointing a company secretary is now optional, many businesses still do so to handle administrative compliance and filings with Companies House.
5 Identify shareholders and people with significant control
Specify your company’s shareholders and any individuals who hold significant control (PSCs), such as those owning over 25% of shares or voting rights. These details must be reported during incorporation and updated if changes occur.
6 Prepare the memorandum and articles of association
Draft the company’s governing documents — the memorandum and articles of association — which outline ownership, management, and decision-making procedures. Standard templates are available from the UK government, though customised versions can be created for specific needs.
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Documents Required To Incorporate a Company
Application to register a company (form IN01)
The application to register a company online, formally known as Form IN01, is a crucial step in the company incorporation process in the UK. This form must be submitted to Companies House, which is the statutory body responsible for the incorporation and registration of companies. Along with the completed Form IN01, you must include the appropriate registration fee.
The fee for electronic filing is £ 12, whereas community interest companies are required to pay £ 27 for their registration. Submitting the form electronically is the most efficient method, ensuring quicker processing times compared to paper submissions. Considering the Companies House workload, electronic filing expedites the registration process, ensuring your company is incorporated in a timely manner.<br>
Memorandum of association
The memorandum of association is one of the key legal company documents required when forming a business in the UK. This document is a formal agreement signed by the company’s directors, shareholders, and guarantors, indicating their commitment to forming the company and agreeing to its articles of association. The memorandum of association essentially signifies the intent of the founding members to create the company. For convenience, Companies House will generate this document for you as part of the registration process.
Articles of association
The articles of association act as the constitution for any company registered in the UK. This vital document details the internal regulations governing the company, outlining the roles and responsibilities of directors and shareholders, and specifying how the company’s daily operations will be conducted.
The articles of association cover various aspects, including decision-making processes, the issuance of shares, and the rights of shareholders. For those looking for a straightforward approach, you can adopt the model articles provided by the government, which are a standardised set of rules that apply to all companies unless otherwise specified. This ensures that your company formation adheres to established guidelines without the need for drafting customised articles.
Additional information
When registering a company, it is important to be mindful of the name you choose, especially if it includes sensitive words or expressions. Certain terms are protected and require prior approval from the government before they can be used in a company name. These sensitive words typically suggest official or charitable status and could be misleading if used without proper authorisation. The list of these restricted terms is available on the gov.uk website, and it is advisable to review this list to ensure your proposed company name does not fall into this category. If your company name does include a sensitive word, you will need to provide additional information and justification as part of your registration application to gain the necessary approval.
Advantages and Disadvantages of Incorporating a Company
Incorporating a company in the UK can offer several advantages but also some potential drawbacks. Here is a summary of the pros and cons.
Pros of incorporation
- Limited liability protection: One of the biggest advantages of company registration or incorporation is that it provides limited liability protection for its directors and shareholders. This means that if the company goes bankrupt or is sued, the personal assets of the directors and shareholders are generally protected.
- Credibility and trust: Incorporating a company can enhance credibility and trust among customers, suppliers, and partners. A registered company is considered more established and professional than an unincorporated business.
- Access to investment opportunities: A registered company can issue shares, allowing for more flexible equity ownership than unincorporated businesses. This can make it easier to raise capital from investors.
- Tax benefits and incentives: Companies in the UK pay corporation tax on their profits, which is currently 19%. This is lower than the income tax rate individuals pay on their personal income. Many tax benefits and incentives are also available to companies, such as research and development tax credits and capital allowances.
Cons of incorporation
- Administrative responsibilities: The company formation process involves complying with various legal and regulatory requirements, such as filing annual accounts and tax returns. You will also have to seek reliable business banking partners, open a business account and ensure tax compliance. This can result in increased administrative burdens for directors.
- Set-up and maintenance costs: There are some hidden costs associated with incorporating and maintaining a limited company, such as registration and annual filing fees. You also have to keep in mind the maintaining of a registered office and obtaining a business bank account.
- Public disclosure requirements: Information about registered companies is publicly available on the Companies House website. This includes information about the company's directors, shareholders, and financial performance.
- Additional tax burden: In some cases, incorporating a company can lead to an additional tax burden. For example, if a company distributes dividends to its shareholders, they will have to pay income tax.
Overall, whether or not to incorporate a company in the UK will depend on the specific circumstances of the business and the owner's goals. Incorporating a new business may be a good option and provide great value for those looking for limited liability protection, credibility, and access to investment opportunities.
However, businesses should carefully consider the administrative responsibilities and costs involved before making a decision on going ahead with the incorporation process.
Additional Factors to Consider
When deciding whether to incorporate your business, there are several important factors to take into account:
New business owners often make mistakes like choosing an unsuitable business structure, failing to prepare the necessary documentation, or overlooking compliance requirements like tax registrations and annual filings. These errors can lead to costly delays and unexpected legal issues. Conducting thorough research and seeking expert third-party guidance can significantly smooth the incorporation process.
Operations Lead
The size and complexity of the business
The size and complexity of your business can significantly impact the decision to incorporate. Larger businesses with multiple employees, extensive operations, and higher revenue streams are more likely to benefit from the advantages of incorporation. Incorporation provides a formal structure, which can streamline operations, enhance credibility, and provide better opportunities for growth. Additionally, complex businesses, such as those with multiple divisions or subsidiaries, can also benefit from the legal and financial protections that incorporation offers, including easier access to capital and improved management of liabilities. Many company formation agents offer services that include setting up a business account and a free business bank account, simplifying the process for new businesses.
The industry in which the business operates
The industry in which your business operates can influence the necessity and benefits of incorporation. Certain industries, such as financial services, healthcare, and digital companies, have specific regulatory requirements and standards that incorporated businesses must meet. For example, financial service providers and healthcare organisations are subject to stringent regulations designed to protect consumers and ensure ethical practices. Incorporation can help businesses in these industries comply with these regulations and build trust with clients and stakeholders. Furthermore, being incorporated can also provide a competitive edge, demonstrating a commitment to professionalism and accountability. A business account tailored to your industry can further streamline financial management and compliance.
The owners' personal circumstances
The personal circumstances of business owners play a crucial role in the decision to incorporate. Owners with significant personal assets, such as property, investments, or savings, may want to consider incorporation to protect their assets from business liabilities. Incorporation creates a separate legal entity, meaning that the business's debts and obligations are distinct from those of its owners. This limited liability protection ensures that, in the event of business failure or legal issues, the personal assets of the owners are shielded from creditors and legal claims. This separation can provide peace of mind and financial security for business owners and their families. Additionally, having a London registered office address can enhance your business's prestige and legal standing.
Consulting with professionals
If you are considering registering your company in the UK, it is highly advisable to consult with an accountant or solicitor. These professionals can provide valuable insights and guidance on the implications of incorporation, helping you to understand the legal, financial, and regulatory requirements involved. An accountant can assist with financial planning, tax considerations, and compliance issues, while a solicitor can help with legal documentation, company formation, and understanding the responsibilities of company directors and shareholders. Many company formation agents also offer packages that include setting up a London registered office address and a business account, further simplifying the process. Engaging with these experts will help you make an informed decision and choose the right business structure that aligns with your goals and circumstances.
By carefully considering these factors and seeking professional advice, you can make a well-informed decision about whether incorporation is the right step for your business, ensuring long-term success and stability.
Jon relishes writing content that both educates and entertains the reader. With a background in copy and content writing for brands, he's told unique stories in creative ways, adding value to products in the luxury sector. Now, he works with our accounting experts and small business owners to bring their advice and journeys to life for Osome's readers. He aims to inspire ambitious entrepreneurs to set their sights high, and build highly-respected, flourishing businesses.
