Two people who have been fitting bathrooms together for three years decide to incorporate. They do it in an evening. One of them uses his home address because it is the address he can remember, they take fifty shares each because it seems fair, and they tick the model articles because the form suggests it. Eighteen months later one of them wants out, the other cannot buy him out, and the home address is on a register that anybody can search, including a customer who is unhappy about a wet room.
None of that is a disaster. All of it was decided in about twenty minutes by people who thought they were filling in a form.
Incorporation is the easy part
You register with Companies House. Online, the application covers the company name, the registered office, the directors, the shareholders and their shares, the people with significant control, and a statement of the intended business activity by SIC code. The registration fee for an online incorporation rose to £50 on 1 May 2024, with a same-day service costing more. Fees are set by regulation and are reviewed, so check the current figure rather than the one a blog told you.
Two requirements arrived with the Economic Crime and Corporate Transparency Act 2023 and catch people who last incorporated years ago. Your registered office must be an appropriate address, meaning somewhere a document delivered by hand or by post would come to the attention of someone acting for the company and could be acknowledged. A PO box on its own does not qualify. You must also supply a registered email address, which is not published but which Companies House will use.
Identity verification has also arrived. Directors and people with significant control are required to verify their identity, either directly with Companies House or through an authorised corporate service provider, and the requirement has been phased in for new and existing companies. If you are forming a company now, plan on verifying.
The name is checked for being the same as an existing name and for sensitive words, and that is all. Passing that check does not give you any right to the name against someone with an earlier trade mark. That is a separate matter and worth settling before you pay a sign writer.
The address you choose becomes public
The register is public and free to search. Your company name, registered office, directors' names, month and year of birth, nationality, and the people with significant control are all visible to anybody with a browser, including customers, competitors and people who are cross with you.
Directors also have a service address, which is the address for correspondence and which is shown publicly, and a usual residential address, which is held by Companies House but not displayed. Using your home as the registered office puts your home on the public record. Many people use their accountant's address or a commercial registered office service for perhaps £30 to £100 a year, which is cheap for keeping your front door out of a search result.
There is a route to suppress a residential address that has already been made public in certain circumstances, and applications to protect information are possible where there is a serious risk of violence or intimidation. It is far simpler not to publish it in the first place.
Shares are the thing people get wrong first
Shares decide three separate things: who owns the value, who controls decisions, and who receives dividends. People usually think only about the first.
Control runs on percentages and thresholds. More than 50% carries an ordinary resolution, which covers most day-to-day company decisions including appointing and removing directors. 75% carries a special resolution, which covers changing the articles and the company name. A 50/50 split gives neither party either, which means that when you disagree, nothing can be decided at all and the only exits are agreement or the courts.
Issuing a hundred shares rather than two is a small kindness to your future self, because it lets you move a 5% stake without fractions. Different classes of ordinary share, sometimes called alphabet shares, let you pay different dividends to different shareholders, which has legitimate uses and also attracts attention if it is being used to divert income. Take advice before you build a structure around it.
Whatever you decide, the articles alone will not cover what happens when one of you leaves, dies or simply stops turning up. That is what a shareholders agreement is for, and it is far easier to write while everyone is still on good terms.
The PSC register is not optional paperwork
A person with significant control is broadly someone who holds more than 25% of the shares, or more than 25% of the voting rights, or who has the right to appoint or remove a majority of the board, or who otherwise exercises significant influence or control. In a small company it is usually the founders, and the answer is obvious.
You must identify your PSCs, keep the information at the company, and tell Companies House. Changes have to be notified within a short window rather than saved up for the annual filing. Failing to comply is a criminal offence, which is a heavier consequence than people expect from a register.
The wider point is that a company is a separate legal person with continuing obligations. It files accounts every year, it files a confirmation statement every year, and it does those things whether or not it traded.
The first year has a calendar attached
Your first accounting reference date is set automatically to the end of the month in which the company was incorporated, one year later, so a company formed on 12 March has a first period running to 31 March the following year. Accounts for a private company are normally due nine months after the accounting reference date, and the first set gets a longer deadline of twenty-one months from incorporation. Late filing carries an automatic penalty that rises the longer you leave it, and doubles if you file late two years running.
The confirmation statement is separate and is a check that the register is right: officers, registered office, shareholders, SIC codes, PSCs, and a statement about lawful purpose. It is due at least once every twelve months and the online fee rose to £34 on 1 May 2024. It is not a set of accounts and it does not replace one.
Corporation Tax has its own timetable. You register with HMRC when you start trading, the tax is due nine months and one day after the end of the accounting period, and the return is due twelve months after it. The tax is payable before the return is due, which is the part that surprises people in their second year.
Where this shows up in the game
In Business Baron you can trade as a sole trader and incorporate later, and the game charges you for the decision either way. Incorporation changes how you take money out, what the bank will lend against, and what happens to you personally when a job goes wrong. The filing deadlines are real dates in the calendar, and missing one produces a penalty rather than a warning. The first incorporation you get wrong costs you nothing but a restart.