Moving From Sole Trader to a Limited Company: What Changes and How to Register

To move from sole trader to a limited company, register a new company with Companies House and tell HMRC when you stop trading as self-employed. You can then be paid as a director and shareholder. Your company needs a registered office, a director’s service address and its own bank account.

What changes the day you switch

• Your tax: Your limited company pays Corporation Tax on its taxable profits. You must tell HMRC when you stop trading as a sole trader and submit your final Self Assessment return for that activity. As a company director, you also file a personal Self Assessment return if required, depending on your income and HMRC’s instructions. You can receive money from the company through a salary and, if you are a shareholder, dividends.
• Your filings: Your limited company must prepare and file annual accounts with Companies House and submit a confirmation statement at least once every 12 months, even if its details have not changed. You must also meet the company’s Corporation Tax filing obligations. Our confirmation statement guide explains what you need to check and how to file.
• Your addresses: Your company needs a registered office address, and you need a director’s service address. Both addresses appear on the public Companies House register. If you work from home and want to keep your residential address off the public register, you can use a suitable address provider for both. Your usual residential address is supplied separately to Companies House and is normally kept private.
• Your money: Open a bank account in your limited company’s name and keep its finances separate from your personal money. Issue new invoices in the company’s name and arrange for existing client contracts to be transferred or updated where necessary. Clients should pay the company for its work, and the company can then pay you through an appropriate salary or dividend arrangement.

How to register

You register a new limited company with Companies House. Your Company Formations can handle the incorporation using the following four stages.

1. Choose and check the company name: Choose a name for your limited company and check that it is available and meets Companies House naming requirements. You can use your existing business name if it is suitable and available for registration.
2. Give the company addresses: Provide a registered office address for the company and a service address for the director. Your registered office must be in the same UK jurisdiction in which you register the company. You must also provide your usual residential address to Companies House, but it is normally kept off the public register.
3. Give the director’s and shareholder’s details: Provide the required personal details of the company’s director and information about its shareholders, including how the shares will be allocated. You will also need to identify any people with significant control (PSCs) as part of the registration.
4. Verify your identity with Companies House: Complete the required identity checks before the company’s incorporation is submitted. Your Company Formations is an Authorised Corporate Service Provider (ACSP), and Companies House identity verification for up to four officers is included at no extra cost with every company formation package.