Business · UK

How to set up a limited company: sole trader or limited, and closing one

Register a limited company with Companies House: online it costs £100 and is usually done within 24 hours. You need a name, a UK registered office address, at least one director and one shareholder, your people with significant control, a SIC code and each director’s identity verification personal code. A sole trader can start before registering with HMRC.

Last updated 17 Oct 2026 · Joel Lister, founder of Radar

Who this is for: anyone in the UK deciding between working as a sole trader and setting up a private limited company, setting one up, or closing one that has stopped trading.

Who it is not for: partnerships, social enterprises and overseas companies, which GOV.UK covers separately, or a company that cannot pay its debts, which needs an insolvency practitioner.

QuestionThe answerSource
Sole trader or limitedA sole trader is personally responsible for the business’s debts and can start without registering. A limited company is legally separate from its owners, whose liability is limited to what they invested, and must register before it trades.GOV.UK, GOV.UK
What you need to registerA name, a UK registered office address, at least one director, at least one shareholder (or guarantor), your people with significant control, a SIC code, and a Government Gateway user ID made for the company.GOV.UK, GOV.UK
The fee£100 online, by debit or credit card. £124 by post with form IN01, by cheque to Companies House.GOV.UK
How long it takesOnline, usually within 24 hours. By post, 8 to 10 days.GOV.UK
Identity verificationA legal requirement for directors and people with significant control since 18 November 2025. Registering asks for each director’s Companies House personal code.GOV.UK, GOV.UK
Corporation TaxUsually set up when you register. Notice that the first accounting period has begun is due within three months of its start.GOV.UK, Finance Act 2004 s.55
Every yearA confirmation statement at least every 12 months, annual accounts to Companies House, and a Company Tax Return to HMRC.GOV.UK, GOV.UK
Closing oneIf it can pay its bills: strike it off (form DS01, £18), usually the cheapest way, or a members’ voluntary liquidation. It can also stay registered as dormant.GOV.UK, GOV.UK

Sole trader vs limited company

Most businesses start as one or the other (GOV.UK). GOV.UK sets the differences out like this (GOV.UK):

  • Liability. A sole trader has unlimited liability and is personally responsible for the business’s debts. A limited company’s owners are responsible only up to the value of what they invested. Either may need business insurance.
  • Money. A sole trader keeps the profits after tax. A company’s directors must follow rules to take money out, such as a salary, dividends or a director’s loan.
  • Registering. A sole trader can start trading without registering, but must register for Self Assessment if they earn more than £1,000 in a tax year (GOV.UK). A company must register with Companies House before it trades.
  • Tax. A sole trader does not pay Corporation Tax; a company does. Income Tax and National Insurance can apply to both, depending on profits and how directors take money out. Both must register for VAT if they meet the requirements.
  • Records and name. A sole trader keeps records to work out profit or loss for the tax return. A company must file accounts and tax returns. A sole trader can trade under their own name or a trading name; a company must follow the naming rules.
  • Status. A sole trader is self-employed. A company director may be an employee or an office holder. Both can take on employees.

Which suits you depends on your own circumstances. GOV.UK points to business.gov.uk for local advice and free support, and an accountant can look at the tax for you (GOV.UK).

How to set up a limited company

  • Choose the type. Limited by shares or limited by guarantee (GOV.UK).
  • Appoint at least one director. A director must be 16 or over. Someone disqualified from being a director, or an undischarged bankrupt, needs the court’s permission. A company secretary is optional. Directors give a service address, which is public (GOV.UK).
  • Decide on shareholders. At least one, who can be a director. You give details of the shares and shareholders when you register (GOV.UK). A company limited by guarantee has at least one guarantor instead (GOV.UK).
  • Identify the people with significant control. For example, anyone holding more than 25% of the shares or voting rights. You confirm them when you register (GOV.UK).
  • Prepare the documents. The memorandum of association, articles of association, statement of capital and, for a company limited by guarantee, the statement of guarantee (GOV.UK).
  • Choose a name. It must usually end in “Limited” or “Ltd” (or “Cyfyngedig” or “Cyf” in Wales), cannot be the same as a name already registered, cannot be offensive, and needs permission for sensitive words (GOV.UK).
  • Have a registered office address. A physical address in the UK, in the same country the company is registered in, where someone will know post has arrived. Not a PO Box. It is public, so you can use an accountant’s or solicitor’s address with their permission. You also give an email address, which is not published (GOV.UK).
  • Pick a SIC code describing what the company does (GOV.UK).

Registering with Companies House: fee and time

Register online with GOV.UK’s service, by post with form IN01, or through an agent or software. Online costs £100 by debit or credit card and is usually done within 24 hours. By post it is £124, by cheque made out to Companies House, and takes 8 to 10 days; post is also the way if you do not want “limited” in the name. You need a Government Gateway user ID and password created for the company (not your personal one), your Companies House personal code and each other director’s, and your people with significant control’s details (GOV.UK).

You get a certificate of incorporation, showing the company number and the date it was formed (GOV.UK).

Identity verification for directors

Since 18 November 2025, directors and people with significant control must verify their identity with Companies House. You do it once, online with GOV.UK One Login and photo ID such as a biometric passport or a UK photo driving licence, in person at a Post Office after starting online, or through an Authorised Corporate Service Provider such as an accountant or solicitor (GOV.UK, GOV.UK). Verifying gives you a personal code. A new company gives each director’s code when it registers; an existing director gives theirs with the company’s next confirmation statement. A person with significant control who is not a director gives theirs within the first 14 days of their birth month (GOV.UK).

After registering: Corporation Tax and the first deadlines

You are usually set up for Corporation Tax when you register, unless the company is dormant. When the 10-digit Unique Taxpayer Reference arrives, add Corporation Tax services to your business tax account (GOV.UK). Do it when you start trading, which includes buying, selling, advertising, renting property or hiring staff; the date you start becomes the start of your first accounting period. HMRC posts an activation code to the registered office within 10 days (GOV.UK). The law sets the time limit for telling HMRC that a first accounting period has begun: not later than three months after it begins (Finance Act 2004, section 55). Corporation Tax is not billed: the company works it out, pays it and reports it (GOV.UK).

Then, every year (GOV.UK, GOV.UK):

  • Confirmation statement. At least once every 12 months, checking the registered office, directors, shareholders, SIC code and people with significant control. £50 online, £110 by post.
  • First accounts. To Companies House 21 months after the company registered; after that, nine months after the end of its financial year.
  • Corporation Tax. Paid, or HMRC told nothing is owed, nine months and one day after the accounting period ends. The Company Tax Return is due twelve months after it ends, even if the company made a loss.

The company deadlines calculator works out your own company’s confirmation statement, first accounts and tax dates from its incorporation date. If you take staff on, the new starter checklist covers what comes next.

How to close a limited company

You usually need the agreement of the directors and shareholders, and a company with no director must appoint one first. You do not have to close a company that has stopped trading: it can stay registered as dormant, still filing annual accounts and a confirmation statement (GOV.UK).

  • Striking off, if the company can pay its bills. GOV.UK calls it usually the cheapest way to close (GOV.UK).
  • Members’ voluntary liquidation, if it can pay its debts and you want to retire or stop running it. A majority of the directors sign a declaration of solvency, the debts must be paid within 12 months, and an authorised insolvency practitioner is appointed as liquidator (GOV.UK).
  • A company that cannot pay its bills has other routes, such as administration or a creditors’ voluntary liquidation, and its creditors’ interests come first. Get advice from an insolvency practitioner (GOV.UK).

Striking a company off: the conditions

A company can be struck off only if, in the last 3 months, it has not traded or sold off any stock and has not changed its name, and it is not threatened with liquidation and has no agreement with creditors such as a Company Voluntary Arrangement. Otherwise it has to be liquidated (GOV.UK).

Before applying, close it down properly: tell HMRC and anyone else with an interest, deal with employees and final wages, deal with assets (anything left passes to the Crown), file final accounts and a Company Tax Return with HMRC, and pay what tax is owed. Keep business documents for 7 years after it is struck off (GOV.UK).

Apply with form DS01; the fee is £18, and cannot be paid by cheque from the company’s own account. Within 7 days, send a copy to everyone who could be affected: shareholders, creditors, employees, pension fund trustees and any director who did not sign. Companies House publishes a notice in The Gazette, and if nobody objects the company is struck off once the 2 months in the notice have passed, confirmed by a second notice. Once struck off, the company’s bank accounts cannot be used. You can withdraw the application while the company is still on the register, and must if it stops being eligible (GOV.UK).

What Radar does with this

  • Life setup asks: “Do you file a Self Assessment tax return?” The online deadline is 31 January. Radar reminds you two months ahead. Radar reminds you 60 days ahead.
  • Put the company’s dates on your Radar (the confirmation statement, the first accounts, the Corporation Tax payment and return) and each one comes round in time, on the same radar as everything else due in the next ninety days.

Radar reads the calendars, task lists and CRM you connect, and the dates you give it. It writes back only when you press a button, and it never sends anything by itself.

Limitations and status

  • Radar does not register, file for or close a company: you do those with Companies House and HMRC.
  • This page sets out what GOV.UK says. It is not tax or legal advice: GOV.UK points to an accountant or business.gov.uk for that, and to an insolvency practitioner for a company that cannot pay its debts.
Get every Companies House and HMRC date for your company — freeLook at a sample radar — no login

Also free: Radar Lite, the habit tracker on its own, for you and anyone 13 or over in the family.

Questions

What is the difference between a sole trader and a limited company?

A sole trader is personally responsible for the business’s debts, can start without registering and pays no Corporation Tax. A limited company is legally separate from its owners, whose liability is limited to what they invested, must register before trading and pays Corporation Tax. (GOV.UK)

How much does it cost to set up a limited company?

£100 to register online with Companies House, usually done within 24 hours, or £124 by post, which takes 8 to 10 days. (GOV.UK)

Do directors have to verify their identity?

Yes. Since 18 November 2025 directors and people with significant control must verify their identity with Companies House, and registering a company asks for each director’s personal code. (GOV.UK, GOV.UK)

When must a new company register for Corporation Tax?

It is usually set up when you register the company. Notice that the first accounting period has begun must reach HMRC not later than three months after it starts. (GOV.UK, Finance Act 2004 s.55)

How do I close a limited company?

If it can pay its bills, apply to strike it off with form DS01 for £18, or use a members’ voluntary liquidation. It must not have traded, sold stock or changed its name in the last 3 months. (GOV.UK, GOV.UK)

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Written by Joel Lister, founder of Radar · first published 17 Oct 2026. Radar is made by Neos Technologies Ltd.