What Does Incorporating a Company Mean?

When you incorporate, you're creating a separate legal entity. Your company can own assets, enter contracts, and take on debts independently of you personally. This separation protects your personal finances if things go wrong.

Types of Companies You Can Incorporate

Private company limited by shares: The most common choice for businesses planning to make profit. Shareholders own the company and are protected from most debts.

Private company limited by guarantee: Usually chosen by charities and non-profits. Members guarantee to pay a small amount if the company fails.

Public limited company (PLC): Required if you want to sell shares to the public. Much more complex and expensive to set up and run.

Most new businesses choose private company limited by shares.

What You Need Before You Start

Company name: Must end with 'Limited' or 'Ltd'. Check it's available on the Companies House website. Avoid names that are too similar to existing companies or include sensitive words.

Registered office address: This appears on public records. Can be your home address, but consider using a service address if you prefer privacy.

Directors: You need at least one, who must be a real person (not another company). Directors must be 16 or over and not disqualified from being a director.

Shareholders: At least one person or company must own shares. Directors and shareholders can be the same people.

Company secretary: Not required for private companies anymore, but you can appoint one if you want.

Step-by-Step Incorporation Process

Step 1: Choose your company name Search the Companies House register to check availability. Your name can't be too similar to existing companies or contain prohibited words without permission.

Step 2: Prepare your details Gather personal information for all directors and shareholders, including full names, dates of birth, and addresses.

Step 3: Decide on share structure Most new companies issue shares with a nominal value of £1 each. You can start with just one share or issue more to multiple shareholders.

Step 4: Complete the application Use the Companies House online service. You'll need to provide:

• Company name and address
• Director and shareholder details
• What your company will do (SIC codes)
• Share information

Or better yet, let Foundrs handle this for you. Our AI asks simple questions in plain English and sorts out all the technical bits behind the scenes. No SIC codes to puzzle over or forms to worry about getting wrong.

Step 5: Pay the fee £50 for online applications, £71 for postal applications. Online is faster and cheaper.

Step 6: Receive your incorporation documents You'll get a Certificate of Incorporation proving your company legally exists, plus details about your company number.

After Incorporation: Essential Next Steps

Open a business bank account: You'll need your incorporation certificate and often proof of address for the business.

Register for corporation tax: Must be done within three months of starting to trade. Don't wait until you make your first sale.

Set up bookkeeping: Keep records of all income and expenses from day one. The law requires it, and it makes your life much easier.

Consider VAT registration: Required if your turnover exceeds £85,000, but you can register voluntarily if it benefits your business.

Get business insurance: Public liability insurance isn't legally required but is essential for most businesses.

Ongoing Responsibilities

Running a limited company means accepting certain responsibilities:

Annual confirmation statement: Filed once a year, confirming your company details are correct. Costs £34 if filed online, or £62 if filed by post.

Annual accounts: Must be filed every year, even if your company doesn't trade. Late filing means automatic penalties.

Corporation tax return: Due 12 months after your accounting period ends.

Common Incorporation Mistakes to Avoid

Choosing the wrong company name: Check trademark databases, not just Companies House. Consider how the name will work online and internationally.

Using your home address unnecessarily: Once it's on public record, it stays there. Consider a business address service if privacy matters.

Not understanding director responsibilities: Directors have legal duties. Make sure you understand what you're signing up for.

Forgetting about ongoing compliance: Incorporation is just the start. Budget time and money for annual filings and tax obligations.

How Much Does It Really Cost?

Companies House fee: £50 online, £71 by post

Professional help: £150-£500 if you use an accountant or company formation service

Bank account: Often free for the first year, then £5-£25 monthly

Ongoing compliance: Budget £500-£1,500 annually for accountancy help

Should You Do It Yourself or Get Help?

The incorporation process itself is straightforward if you understand what you're doing. However, getting professional advice about your specific situation often pays for itself through:

• Optimal share structures for tax efficiency
• Advice on director appointments and responsibilities
• Help setting up proper record-keeping systems
• Ongoing support with compliance requirements

At Foundrs, we've built something different. Our AI handles the technical complexity while giving you the control and understanding you need. You get professional-level setup without the professional fees, plus ongoing support as your business grows.

Your Company is Just the Beginning

Incorporation creates the legal framework for your business, but it's not a business in itself. Your real work starts after you get that certificate - building something people want to buy.

The good news? You're now legally ready to trade, employ people, win contracts, and grow. That's worth celebrating.