Is a limited company the right move
A limited company is a separate legal person. It owns its own money, signs its own contracts and pays corporation tax on its profits. Your personal assets are generally protected if the business fails, and some clients and contracts expect a company rather than a sole trader.
It also brings more paperwork. Accounts go on a public register, the money in the company bank account is not yours to spend freely, and you need to pay yourself through salary or dividends. Corporation tax is 19% on profits up to £50,000 and 25% above £250,000, with marginal relief in between. For a small side business, staying a sole trader is often simpler. We go through the numbers with you before any company is formed.
Good company formation advice sometimes ends with the answer "not yet". If your profit is modest or likely to fall, the extra costs and duties of a company can outweigh any tax difference. We would rather say so at the start than set up a company you close a year later.
What Companies House asks for
Forming a company online is quick once the details are ready. Companies House usually registers a new company within 24 hours. The work is in getting the details right first time, because some of them are hard to change later and most become public. Our company formation service checks each item with you before the application goes in.
- A company name that is available and allowed
- A registered office address in England and Wales, plus a registered email address
- At least one director who is a person aged 16 or over
- Shareholders and how many shares each will hold
- Details of anyone with significant control, such as more than 25% of the shares or votes
- A SIC code that describes what the company does
- Memorandum and articles of association
What is included
- Advice on sole trader versus limited company
- Name checks and Companies House registration
- Help with director and PSC identity verification
- Share structure and articles of association
- Corporation tax registration with HMRC
- PAYE employer registration
- VAT registration where needed
- A deadline calendar for your first year
Identity checks for directors
Since 18/11/2025, identity verification has been compulsory. A company cannot be formed with a director whose identity has not been verified, and people with significant control must verify too. You can do this yourself through GOV.UK One Login, which gives you a personal code, or through an authorised agent.
We tell you exactly what each director needs to do and when, so the application is not held up at the last step.
Company formation in Watford and the first few weeks
Registration is only the start. Within 3 months of starting to trade, the company must tell HMRC it is active for corporation tax. If anyone is going to be paid through payroll, including you as the only director, the company must register as an employer before the first payday.
VAT registration is needed if turnover goes over £90,000 in any rolling 12 months, and some businesses choose to register earlier. You will also want a business bank account and a bookkeeping system from day one. Founders in Watford, St Albans and Hemel Hempstead often ask us to handle all of this together, so nothing is missed in the excitement of the launch.
Your new company will also need its own Government Gateway login for HMRC services, separate from your personal one. Keep the company records, share certificates and the registration documents together from the start, because banks, landlords and larger customers often ask to see them.
Your first year end and accounts
The first accounting period runs from the date of incorporation to the end of the month in which the first anniversary falls. The first accounts are due at Companies House 21 months after the date of incorporation. A confirmation statement is due at least every 12 months.
Corporation tax periods can be no longer than 12 months, so a long first period is split into two for tax. You can change the year end if a different date suits your business better, for example to line up with a busy season. We set reminders for every date from the start.
Names, shares and who owns what
Choosing the shareholders is a tax decision as much as a legal one. Dividends follow shares, so who holds them affects who pays tax on profits later. A company can be formed by one person, and many are. Where two founders or a couple are involved, we talk through how the shares should be split and what happens if someone leaves.
If you change your mind about the name, it can be changed later by a resolution of the shareholders. A business that trades from Croxley Park or Clarendon Road today may look very different in five years, so it helps to set things up with that in mind.
Where founders plan to bring in investors later, the share structure chosen at company formation can make that easier or harder. We point out the questions to ask now, and work alongside your solicitor where a shareholders agreement is needed.
Who this suits
- Sole traders thinking of moving to a company
- First time founders launching a startup
- Contractors who need a company for client work
- Couples or partners starting a business together
- Anyone in Hertfordshire unsure which structure suits them
Common questions
How long does it take to set up a limited company?
Once every director has verified their identity and the details are ready, Companies House usually registers a company within 24 hours of an online application. Gathering the information is often the slower part.
Can I use my home address as the registered office?
You can, as long as it is a proper address in the right part of the UK and post sent there will reach you. It will appear on the public register, so some people prefer to use a different address.
Do I have to verify my identity to become a director?
Yes. Identity verification has been compulsory since 18/11/2025. A company cannot be formed with an unverified director. You can verify through GOV.UK One Login or through an authorised agent.
Can one person be the only director and shareholder?
Yes. A company can be formed by one person, who can be both the sole director and the only shareholder. You still need to meet all the filing duties that come with it.
What is a SIC code and which one should I choose?
A SIC code is a standard code that describes what your company does. You choose at least one when you register. We help you pick the code that best matches your main activity.
I am a sole trader. Should I switch to a limited company?
It depends on your profit, how you want to pay yourself and how much paperwork you are willing to take on. We compare the tax under both structures using your own figures before you decide.
When are my first company accounts due?
The first accounts are due at Companies House 21 months after the date your company was formed. Corporation tax for the first period is due 9 months and 1 day after the end of that tax period.