10 frequently asked questions about company formation

9th November 2026

If you're considering setting up a limited company, you may be afflicted with a notebook full of unanswered questions about where to start and what you’ll need. This is normal. There’s plenty to think about throughout the process and this information doesn’t come naturally. It can require a fair amount of research. Importantly, you want to get it right. For this reason, 99p Company Formations have answered some of the questions we are most commonly asked when clients approach us for third party incorporation. 

How do you set up a limited company? 

To start a limited company, you must register your business with Companies House. Once your application has been approved, your company becomes a separate legal entity, meaning it has its own legal identity and finances.

Before registering, you need to: 

Choose your company name

Your company name needs to meet Companies House requirements. It cannot be identical to an existing registered company name, contain certain restricted words without permission or be considered offensive or misleading.

It is worth checking that your preferred name is available before making any decisions about branding or marketing materials. 

At a basic level, your company name must:

• Accurately reflect your business without exaggerating status or scale

• Not imply regulated activity unless properly authorised

• Avoid sensitive terms unless supporting documentation is provided

• Use the correct legal ending if you are forming a limited company

• Not be the same as another business on the Companies House register

• Not use offensive terminology or language

Settle on your company structure

When setting up a UK limited company, you need to choose whether it will be:

• Limited by Shares, or

• Limited by Guarantee

Each is suited to different purposes.

A company limited by shares:

• The company is owned by shareholders.

• Shareholders invest capital in return for shares, and liability is limited to the amount unpaid on those shares.

• Profits can be distributed to shareholders as dividends.

• This structure suits most standard businesses, start ups, or any profit driven venture.

• You must issue at least one share and have at least one shareholder.

A company limited by guarantee:

• The company does not have shareholders or share capital. Instead, it has guarantors (members) who agree to pay a guaranteed amount (typically a nominal sum) if the company is wound up.

• There are no shares, so profits generally are not distributed to members, any surplus stays within the organisation.

• This structure is typically used by non profit organisations, charities, clubs, associations, and community groups.

• Guarantors’ liability is limited to their agreed guarantee after that, personal assets are protected.

Appoint your director and shareholder(s)

Every limited company must have at least one director. A company limited by shares must also have at least one shareholder, although the same person can fulfil both roles.

You will also need to identify any people with significant control (PSCs), such as individuals who own more than 25% of the shares or voting rights, or otherwise exercise significant influence over the company.

Choose a registered office address

Your company must have an appropriate registered office address in the UK jurisdiction where it is incorporated. You could use:

• Your home address 

• A physical office address 

• A virtual office address

This address appears on the public Companies House register, so consider carefully whether you want to use your home address if your business operates from your personal property. 

Submit your application

Once you have gathered the necessary information, you can submit your incorporation application directly to Companies House or use a company formation agent.

You will need to provide details about your company, its directors, shareholders, registered office and people with significant control. Directors and other relevant individuals may also need to complete Companies House identity verification.

Once approved, Companies House will issue a Certificate of Incorporation confirming that your company legally exists.

For a more detailed walkthrough, read our guide to how to set up a limited company.

How do you register a limited company? 

You can register a limited company directly through Companies House or use a company formation agent to submit the application on your behalf.

The process generally involves:

1. Check your company name: Make sure your chosen name is available and complies with Companies House naming rules.

2. Prepare your company details: Gather your registered office address, director information, shareholder details and share structure.

3. Provide your registered email address: Companies House requires an email address where official communications can reach someone acting on behalf of the company.

4. Complete identity verification: Directors and other relevant individuals must meet the applicable Companies House identity verification requirements.

5. Submit your application: Complete the online registration form, provide the required information and pay the registration fee.

6. Receive your Certificate of Incorporation: Once Companies House approves your application, your company is officially registered.

Online applications are usually processed within 24 hours, although this is not guaranteed. As of November 2026, the standard Companies House online incorporation fee is £100. If you use a formation agent, the total price will depend on the service and any additional features included.

You can find more information in our Companies House registration checklist.

How do you set up a limited company email address? 

Setting up a company email address is as simple as setting up a personal account. Rather than using a personal email address, such as a Gmail or Outlook account, many businesses choose an address that includes their company domain.

For example, if your company website is www.examplebusiness.co.uk, you could create an email address such as:

• info@examplebusiness.co.uk

• accounts@examplebusiness.co.uk

• yourname@examplebusiness.co.uk

To set one up, you will generally need to:

1. Register a domain name: Choose and purchase a domain that reflects your company name or brand.

2. Choose an email hosting provider: Services such as Microsoft 365 and Google Workspace allow you to create professional email accounts using your own domain.

3. Connect your domain: Follow your provider's instructions to update your domain's email settings, including the required DNS records.

4. Create your email address: Choose the address you want to use and set up your account.

5. Test your email: Send and receive a few emails to make sure everything is working correctly.

What are the different types of limited company? 

There are two main types of private limited company in the UK: companies limited by shares and companies limited by guarantee:

Company limited by shares

A company limited by shares is the most common structure for businesses that intend to make a profit. Ownership is divided into shares, which are held by shareholders. These shareholders may receive dividends when the company has sufficient distributable profits.

Shareholders' liability is generally limited to any amount unpaid on their shares. For example, if you hold one £1 share that has been fully paid, you will not normally be required to contribute more towards the company's debts simply because you are a shareholder.

This structure is suitable for:

• Start ups and small businesses

• Freelancers and consultants operating through a limited company

• Businesses intending to generate profits

• Companies looking to bring in investors or additional shareholders

Company limited by guarantee

A company limited by guarantee does not have shareholders or share capital. Instead, it has members known as guarantors, who agree to contribute a specified amount if the company is wound up and cannot pay its debts.

Rather than distributing profits to shareholders, any surplus is generally retained and reinvested into the organisation.

This structure is commonly used by:

• Charities.

• Clubs and associations.

• Community organisations.

• Membership organisations.

• Non profit organisations.

Do I need a solicitor to form a limited company? 

You do not need a solicitor to form a limited company. It might, however, be beneficial to seek legal advice if:

• You are setting up a company with several business partners

• You need a shareholders' agreement to establish ownership rights and responsibilities

• You are creating a complex share structure

• You are entering into significant commercial agreements

• You have questions about intellectual property or business ownership

• You are operating in a regulated industry

How to pay yourself in a limited company 

One of the main differences between running a limited company and operating as a sole trader is how you take money out of the business. A limited company is a separate legal entity, which means the company's money does not automatically belong to you, even if you are its sole director and shareholder.

There are several ways you can receive money from your company.

Pay yourself a salary

You can pay yourself a regular salary through your limited company. To do this, your company will generally need to register as an employer with HMRC and operate a PAYE payroll scheme. This involves calculating and reporting salary payments, deducting any Income Tax and National Insurance due, and accounting for employer National Insurance where applicable.

A salary is treated as a business expense, which can reduce your company's taxable profits.

Pay yourself dividends

Dividends are payments made from the company's available profits after Corporation Tax. They are not treated as ordinary business expenses, and you cannot pay them simply because there is money available in the business bank account.

You must have sufficient distributable profits to support the payment and follow the correct procedures, including recording the dividend decision and preparing dividend vouchers.

Shareholders may also need to pay personal tax on dividends they receive, depending on their overall income and the applicable dividend tax rules.

Take a combination of salary and dividends

You could choose to receive a combination of salary and dividends. This can offer flexibility when managing personal income and company finances, although the most suitable approach depends on your circumstances, tax position and the company's profitability.

You cannot withdraw company money whenever you want. Any money taken out must be properly recorded and categorised, whether it is salary, dividends, reimbursement of business expenses, or a director's loan. 

If you are unsure how to structure your payments, an accountant can help you understand the options.

How to start a company with no money 

You do not necessarily need a large amount of money to start a limited company. In fact, many businesses begin with very little initial investment, particularly if they provide services rather than selling physical products.

However, although you may be able to register a company with minimal upfront costs, you will still need to consider the expenses involved in operating it.

Here are a few ways to keep your initial costs down.

1. Start from home: If your business does not require a dedicated premises, working from home can help you avoid office expenses. You will still need a suitable registered office address for Companies House, which does not necessarily have to be your workplace. 

2. Use free or low cost software: There are plenty of free or inexpensive tools available to help you manage everyday business tasks, including bookkeeping, document creation, project management, online marketing, and communication.

3. Avoid unnecessary purchases: You may not need expensive equipment or a professional website when you first start trading. Focus on the essentials and invest in additional resources as your business grows.

Look for funding opportunities: Depending on your business and circumstances, you may be eligible for start up grants, business loans, local funding schemes or other forms of financial support.

Reinvest your profits: You can use money generated by the business to fund future development, purchase equipment or expand your services.

You should also budget for the cost of company formation, ongoing filing obligations, insurance, accounting support and any relevant tax liabilities.

Do I need an office to start a limited company? 

When forming a limited company, you will need access to a registered office address.

Your registered office address is necessary because it is the official address used by Companies House and other organisations to send formal correspondence. It must be a physical address in the same part of the UK where your company is registered, and it must meet Companies House requirements for an appropriate address.

As mentioned above, this can be either your own home or office address, or a virtual office address. 

Why does my company need to be registered with Companies House? 

If you want to operate as a UK limited company, you must register with Companies House. Registering your company is what gives it its separate legal identity.

Companies House is the official registrar of companies in the UK. It maintains the public register of incorporated businesses and records important information about their structure, ownership and management.

This means your company can:

• Enter into contracts in its own name

• Open a business bank account

• Own property and other assets

• Employ staff

• Take on business debts and liabilities

• Issue shares and bring in investors, where appropriate

What is a company formation agent? 

A company formation agent is a business that helps individuals and organisations register new companies with Companies House. Rather than completing the incorporation process yourself, you can provide your company details to an agent, who will prepare and submit the registration application on your behalf.

Depending on the service you choose, a company formation agent may help with:

• Checking whether your chosen company name is available

• Preparing your incorporation application

• Submitting your registration to Companies House

• Providing your Certificate of Incorporation and company documents

• Supplying a registered office address

• Providing additional company secretarial services

• Helping with end of year accounts 

Ready to register your company?

With clear preparation and the right information, registering your limited company with Companies House is a straightforward process. If you prefer a simplified, supported experience, 99p Company Formations offers fast, affordable incorporation services with optional add ons to help your business stay compliant from day one.

We offer full registration services that help you begin trading without the administrative hassle. Call us today to get started.