Forming a company is an exciting milestone, but it’s just the beginning of your business journey.
Once your company is incorporated and you’ve received your certificate of incorporation from Companies House, there are several essential tasks you must complete to ensure your business is legally compliant and set up for success.
This guide will walk you through the crucial steps you need to take after forming a company, from registering with HMRC to setting up business bank accounts.
Whether you’re a first-time entrepreneur or expanding into a new venture, following these steps will help you navigate the early stages of your business with confidence.
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1. Set Up a Business Bank Account
Opening a business bank account is essential for managing your company’s finances and separating them from your personal accounts.
A dedicated business account allows you to:
- Manage your cash flow efficiently.
- Maintain clear and accurate financial records.
- Present a professional image to clients and suppliers.
When choosing a business bank account, compare the fees, services, and features offered by different banks. Many banks also offer specific accounts tailored to startups and small businesses, which may include perks like reduced fees or free banking for the first year.
2. Set Up Business Insurance
After forming a company, it’s important to arrange the right business insurance to protect your assets, employees, and operations. Some types of insurance are mandatory, while others are recommended depending on the nature of your business.
Mandatory insurance includes:
- Employers’ Liability Insurance: Required if you employ staff, this covers claims for compensation from employees who are injured or become ill due to work.
Recommended business insurance policies include:
- Professional Indemnity Insurance: Covers legal costs and claims for compensation if a client suffers financial loss due to your advice or services.
- Public Liability Insurance: Protects your business from claims made by members of the public for injury or property damage.
- Product Liability Insurance: Covers compensation claims for damage or injury caused by defective products your business supplies.
Choosing the right insurance cover depends on your business’s size, industry, and activities. Speak to an insurance broker to ensure you have adequate coverage.
3. Purchase a domain and build a website
No matter what industry you’re operating in, a professionally designed website is a crucial asset for acquiring new customers in 2024 when most research and buying is done online.
When choosing a domain, you should try to incorporate your business name as well as a well-known and trusted root domain like ‘.com’ ‘.co.uk’, ‘.co’ or ‘.io’ if you’re a tech business. We recommend buying your domain through GoDaddy.com.
Most startups won’t be ready to hire someone full time to build a website or an MVP (Minimum Viable Product) so exploring high-quality, startup-focussed software development agencies is a more cost effective and flexible option.
4. Register for VAT (If Required)
Companies often wonder, when is the right time to register for VAT? There are only two scenarios:
- You must register for VAT if your company’s taxable turnover exceeds the VAT threshold, which is currently £90,000 in a rolling 12-month period.
- However, if your turnover is below this threshold, but you expect you’ll get to the threshold, you can voluntarily register for VAT at any time. Before hitting the threshold, being VAT registered early means you may be able to reclaim VAT on business purchases – in turn, helping boost your cashflow.
It’s important to note that when your business is VAT registered, you’ll need to charge VAT on sales, submit VAT returns, and pay any VAT owed to HMRC. If you decide to register voluntarily, make sure it suits your business model and cash flow needs.
5. Set Up Payroll and Register for PAYE (If Hiring Employees)
If you plan to hire employees (including yourself as a director), you’ll need to set up a payroll system and register for PAYE with HMRC. PAYE is HMRC’s system for collecting Income Tax and National Insurance from employees’ salaries.
Registering for PAYE should be done at least two weeks before your first payroll run, and once registered, you’ll be responsible for:
- Calculating employees’ Income Tax and National Insurance contributions.
- Deductions for student loans, pensions, and other benefits (if applicable).
- Submitting payroll information to HMRC through Real-Time Information (RTI).
You can manage payroll manually or use payroll software to automate calculations and submissions. Many accounting software packages such as Xero & QuickBooks include integrated payroll features to streamline this process.
6. Keep Your Statutory Registers Updated
Every UK limited company is legally required to maintain up-to-date statutory registers, which are a set of official records that document important details about the company. These include:
- The register of directors.
- The register of members (shareholders).
- The register of persons with significant control (PSC).
- Records of share allotments and transfers.
These registers must be kept at the company’s registered office address (or an alternative inspection location) and made available for inspection if requested by Companies House or HMRC.
7. Keep Track of Deadlines and Stay Compliant
After incorporating a company, staying on top of important deadlines is crucial for remaining compliant with UK regulations. Missed deadlines for filing accounts, tax returns, or other required documentation can result in fines and legal consequences.
To avoid any issues:
- Set reminders for key deadlines, such as filing your year-end accounts and confirmation statement (9 months after incorporation) and corporation tax returns (12 months after incorporation, with tax due at the 9 month mark).
- Keep detailed financial and administrative records to ensure smooth reporting to HMRC and Companies House.
- Review your company’s progress regularly to ensure compliance and identify areas for improvement.
8. Appoint an Accountant or Set Up Accounting Software
As you can see from the list above, knowing your deadlines and your requirements at each stage of your business is crucial for its success. After forming your company, one of the most important decisions is whether to hire an accountant or use accounting software to manage your company’s finances.
If you prefer to manage your accounts independently, there are plenty of accounting software solutions available, such as Xero or QuickBooks which can help you automate tasks, track expenses, and generate financial reports.
But if you really want to make sure you’ve covered all basis, and give yourself more time to grow your business, then hiring an accountant is your best bet.
An accountant can help with:
- Preparing and filing your year-end account and confirmation statement.
- Managing payroll and VAT registration and returns (if applicable).
- Advising on tax-saving strategies and ensuring you don’t miss deadlines.
By following these steps, you’ll not only ensure that your business remains compliant with UK laws but also set a solid foundation for growth and success. If you’re unsure about any of the processes, our team can help direct you to the right place.
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