Incorporating takes 24 hours and costs £100. It is never the bottleneck, so there is no reason to rush it.
The running costs — accountant, insurance — only start once the company exists. With no UK clients yet, that's pure burn. So the sensible sequence is:
- Now: both of you do the identity verification (step 1). It's free or near-free, and it's the one step with a lead time that could hold everything up later.
- Now: pitch, quote, get a deal to the point of signing. You can do all of that before the company exists.
- When a real deal is close: incorporate that week, then sign the contract as the company.
- After that: accountant and insurance, once there's revenue paying for them.
The one rule that matters: don't sign a big custom-software contract personally. A £1,490 website carries little risk. A £20,000 booking system a business depends on is exactly what the company is for.
Why a limited company and not sole trader
Short version: the custom software projects we're quoting are £8,000 to £25,000, and they're systems the client's business depends on — bookings, payments, compliance records. If one fails and it costs the client money, a sole trader pays out of his own pocket and his own house. A limited company is a separate legal person, so the company carries that risk instead of you.
It also helps commercially. A builders merchant deciding whether to hand you £20,000 for a trade portal takes a registered company more seriously than a bloke with a bank account.
If you're already a higher-rate taxpayer on other income, taking money straight out of a company costs you more tax, not less. Roughly:
| Route | All-in tax on money you take out |
|---|---|
| Sole trader (higher rate) | 40% income tax + 2% NI ≈ 42% |
| Company → dividends (higher rate) | 19% corp tax, then 35.75% ≈ 48% |
| Company → profits left in | 19%, and nothing more until you take it |
| Company → employer pension contribution | Deductible against corp tax, no personal tax now |
One correction worth making: a salary you pay yourself is a company expense — it comes off the profit before Corporation Tax. So it isn't "corp tax and then 40% on top". Dividends are the ones paid out of already-taxed profit.
So the honest position: incorporate for the liability protection and the credibility, not to save tax. Then leave profit in the company at 19% rather than pulling it out at 48%, and use employer pension contributions as the efficient way to extract. That's the right answer for someone already over the higher-rate threshold.
⚠️ Decide these before you start
The form will ask for all of it. Have it ready and the whole thing takes twenty minutes.
Both of you are over 25%, so you both go on the public register as Persons with Significant Control, and you both need the identity verification in step 1.
The steps
Verify your identity
~20 min · do this firstThis is new and it is not optional. Since 18 November 2025, every company director and every Person with Significant Control has to verify their identity with Companies House. You cannot be appointed as a director of a new company without it.
For you it's free and straightforward: One Login, twenty minutes, passport or driving licence. You're UK-resident with a UK credit history, which is what that system checks against.
He's on 49%, so he's also a Person with Significant Control and he also has to verify. But GOV.UK One Login leans on a UK credit file and a short list of supported passports, so it routinely fails for people living overseas — with no reason given and no way forward.
He'll use an ACSP instead (Authorised Corporate Service Provider) — a firm registered with Companies House that verifies him directly and issues the same personal code. They accept a far wider range of international documents, it's remote, it usually takes under an hour, and it costs somewhere around £35–£100. Worth asking your accountant whether they're an ACSP, since many are — that would handle it in one go.
Both of you need your codes before the company can be registered. Start this first, because it's the step most likely to hold everything else up.
Free for you · ~£35–100 for AndrésRegister the company
~20 min · live in 24hDo it directly on gov.uk rather than through a formation agent. It's cheaper and there's nothing an agent does here that you can't.
You'll enter the name, the registered office, yourself as director, the shareholders and their shares, the SIC code, and you'll accept the standard model articles of association. Take the model articles — they're fine for a company like this.
The fee went up on 1 February 2026. It's now £100 online, where it used to be £50. Don't be caught out by an old blog post quoting the lower figure.
£100Open a business bank account
Same weekDo this as soon as the company number comes through. Company money and your money never touch. Not once, not "just this time" — mixing them is the single biggest cause of accounting misery in year one.
Any of the high street banks will do it, and the app-based ones (Tide, Starling, Monzo Business, Revolut Business) open faster. You'll need the company number, your ID and the registered office address.
Since you're UK-resident and the sole director, this is straightforward for you. It would not have been if the director lived abroad.
Register for Corporation Tax
Within 3 months of tradingCorporation Tax is the tax the company pays on its profit. You must register within three months of starting to do business — and "starting to do business" includes things like advertising and taking on your first client, not just getting paid.
| Company profit | Rate |
|---|---|
| Up to £50,000 | 19% |
| £50,000 – £250,000 | tapered, about 26.5% on the slice in between |
| Over £250,000 | 25% |
Put the tax money in a separate account the day each invoice is paid. It isn't your money. Businesses die from spending it.
Set up PAYE, if you take a salary
Before the first paydayIf the company pays you a salary — and it probably should — you need to register as an employer with HMRC and run payroll.
The usual approach for a single-director company is a salary of £5,000 a year, which sits right on the threshold where neither you nor the company pays National Insurance, and then take the rest as dividends.
Dividend tax for 2026/27 — first £500 free, then:
| Band | Rate |
|---|---|
| Basic | 10.75% |
| Higher | 35.75% |
| Additional | 39.35% |
⚠️ These went up by 2 points on 6 April 2026 in the November 2025 Budget. A lot of blogs still quote the old 8.75% / 33.75% — ignore those. Your accountant will set the exact salary figure; don't guess this one.
Pay the ICO data protection fee
~10 minAlmost every UK business handling personal information has to register with the Information Commissioner's Office and pay an annual fee. You'll be handling client data and building systems that hold their customers' data, so this applies.
For a company your size it's £52 a year, or £47 if you pay by Direct Debit. It's cheap, it takes minutes, and not paying it is a pointless fine.
£52/yearGet professional indemnity insurance
Before the first big projectThis covers you if your work causes a client a financial loss. For website work it's a nice-to-have. For £20,000 booking systems that a business runs on, it's the difference between a bad month and a disaster.
Plenty of commercial clients will also ask to see it before signing, so it doubles as a sales asset. Get quotes before you pitch the bigger prospects.
Find an accountant in Liverpool
Month oneA local accountant for a small limited company costs very little per month and will handle the annual accounts, the Corporation Tax return and the payroll. Get one in the first month, not in month eleven when a deadline is coming.
Ask them specifically about two things: the best salary and dividend split for your situation, and when it's worth registering for VAT voluntarily.
Two mistakes to avoid
You only have to register for VAT once your turnover passes £90,000 in any rolling twelve months — that's a moving window, not the tax year, so check it monthly rather than once a year.
Until then, invoices show no VAT at all. Not a VAT line, not "VAT included", not a zero. Charging VAT you aren't registered for is illegal and it's the most common beginner's mistake there is.
Scope, what is not included, payment milestones, and a clause saying the intellectual property transfers to the client on final payment — not before.
English law also lets you charge statutory interest and a fixed fee on late commercial payments, which is a genuinely useful lever, but only if the payment terms are written down. Andrés can get you a contract template.
What it actually costs to run
| Item | Realistic cost | When you need it |
|---|---|---|
| Incorporation | £100 once | Direct at Companies House. Don't pay an agent for this |
| Identity verification | Free (you) · ~£35–100 (Andrés) | Now |
| Accountant | £60–150/month | Once the company exists |
| Professional indemnity insurance | £200–600/year typical for a small IT consultancy | Before the first big project |
| ICO fee | £52/year | Once trading |
| Confirmation statement | £50/year | Annually |
| Business bank account | Free to ~£10/month | Straight after incorporation |
That lands at roughly £150–£250 to set up and £1,000–£2,500 a year to run, depending mostly on what the accountant charges.
That is far above what this should cost, and it's worth asking exactly what's in it. Formation agents bundle in things you don't need — registered office packages, "company secretary" services, share certificate binders, VAT registration you aren't required to do yet.
Two things that soften the ongoing number: every one of these costs is a deductible company expense, so at 19% corporation tax the real cost is about 81% of the sticker price. And £2,000 a year against a single £8,000–£25,000 software project is noise — the point is simply not to carry that cost before the first project exists.
What the year looks like once it's running
| What | Where | How often |
|---|---|---|
| Confirmation statement | Companies House | Yearly · £50 |
| Annual accounts | Companies House | Yearly |
| Corporation Tax return & payment | HMRC | Yearly |
| Payroll submissions | HMRC | Every payday |
| VAT returns | HMRC | Only once registered |
| Data protection fee | ICO | Yearly · £52 |
Your accountant handles most of this. Your job is to keep every receipt and keep the company account clean.
The one thing to sort with Andrés
Registering at Companies House records who owns what percentage. It says nothing about what happens when there's a disagreement, when one of you wants out, or who owns what was built.
The agreement needs to cover: what each of you puts in, how money is split between invoices, dividends and reinvestment, what happens if someone leaves, and — importantly — who owns the code.
On that last point, so it's clear from the outset: the Web Express engines, templates and existing codebase are Andrés's and predate this company. They get licensed to the company to use, not handed over to it. That protects him, and honestly it protects you too, because it means everyone knows where they stand before there's money on the table rather than after.
The points are already drafted. There's a full set of heads of terms ready to take to a solicitor:
Open the shareholders' agreement terms →
Prepared by Web Express, 16 August 2026. Fees, thresholds and rules were checked against gov.uk and official sources on that date — UK tax rates change every April, so re-check anything time-sensitive before acting on it. This is a practical summary, not legal, financial or tax advice. Use an accountant for the incorporation year and a solicitor for the shareholders' agreement.