What is incorporation?
Incorporation is the process by which a new or existing business registers as a company. A company is a legal entity with its own separate legal identity, distinct from the people who own or run it. Most companies are limited liability companies, meaning the liability of their members is limited either by shares or by guarantee.
A business cannot legally operate as a limited company until it has been incorporated with Companies House. Once incorporated, directors must file certain documents annually, such as annual accounts and a confirmation statement. They must also notify Companies House of any changes, such as the resignation of a director or a change of registered office.
Who can incorporate a company?
Only people aged 16 and over can legally enter into a contract. One or more people can form a company by subscribing their names to a memorandum of association, stating that they wish to form the company for lawful purposes.
How to register a company
To register your company, you'll need to:
- Choose a business structure
- Choose a company name
- Provide a registered address
- Appoint a director
- Decide on shareholders
- Choose a SIC code
- Complete ID verification
- Prepare key company documents, such as the memorandum of association and articles of association
- Pay the registration fee
- Common incorporation mistakes
- Some of the most common mistakes we see founders make include:
- Choosing the wrong business structure
- Not checking whether the company name is available
- Using a home address without realising it becomes public record
- Rushing a share split
- Ending up with a messy share structure
- Picking the wrong SIC code
- Leaving accounting and tax matters too late
- Not keeping company records updated
- Assuming incorporation automatically means the company is investment-ready
Most important of all: not getting advice when it's needed. Reach out before you make decisions you'll end up regretting, or that end up costing you and your business.
Common FAQs founders have when starting a business
Do I need to register a trading name? No. Trading names don't need to be registered with Companies House. However, you should check they aren't trademarked, and always display your legal company name on official documents.
What's the difference between a company name and a trading name? Your company name is your legal, registered name with Companies House. Your trading name is the brand name you use publicly. You can have both, but only your company name is legally protected.
Do I need an accountant if I use accounting software? Good software can handle invoices, expenses, and reports, but an accountant brings experience. They can explain what's tax-deductible, check your filings, and help keep you compliant.
How does GDPR affect my small business? If your business handles personal information - such as customer names, emails, or payment details - GDPR applies to you, regardless of your size. You must collect and store data securely, explain how it's used, and only keep it for as long as necessary.
Can I be the only director and shareholder in my business, and how would this affect S/EIS? Yes, you can be the sole director and only shareholder. You'll own 100% of the shares and control all business decisions. However, when you later raise funding, if you invest in your own business you won't be able to make use of S/EIS relief, as this requires you to own 30% or less of the company.
What address do I need for my registered office? Can I use my home address? Your registered address must be a real UK address where official mail can be sent. You can use your home address, but be aware this will then appear on the public record.
What happens after incorporation?
- Once your business is incorporated, there are still several things to take care of:
- Register for corporation tax within 3 months
- File company and accounting records
- Open a business bank account
- Set up accounting software
- Consider whether you need to register for VAT
- Sort your registered address and people with significant control
- Check whether any licences or insurance are needed
- If you plan to employ someone, follow the relevant checklist - including workplace safety regulations, registering for PAYE, employers' liability insurance, and pensions
- Check any other rules that apply to your business, such as those relating to the sale of goods and services, competition law, data protection, health and safety, environmental regulations, tax, location, and employment
Here is an article from Foundrs that dives into more detail on the above.
How FOUNDRS can help
Incorporating a company can feel simple on the surface, but there are several decisions founders need to get right from the start. Foundrs builds the connectivity between founders and Companies House, guiding founders through the key steps of setting up a UK company - what Companies House requires, why identity verification may be needed, what information to prepare, and what happens after incorporation.
Where identity verification is required, Foundrs hands founders over to trusted partners to complete the checks, with the results returning to the same platform they started in - creating one continuous thread so founders understand where they are, what's happened, and what comes next.
Foundrs helps founders get their company set up properly, while FounderCatalyst supports the next stage - from SEIS and EIS Advance Assurance to funding round legals, data rooms, cap table management, and share option schemes.
