How to set up a limited company for your consulting business

Thinking of taking your consulting business to the next level by setting up a limited company? You're not alone. Many consultants make the switch – for protection, professionalism, and to support growth.

Whatever your reason, this article will help you understand some of the key considerations, not as an exhaustive list, but as a starting point to help you plan your next move with more clarity and confidence. It’s important that you speak to a professional advisor or an accountant for advice tailored to your situation.

Is a limited company right for you?

Before diving into the how, let’s look at the why. Many consultants start out as sole traders. It’s simple, fast and requires little admin. But as your business grows, so do the potential benefits of registering your business as a limited company.

• Limited liability – Your company becomes a separate legal entity, meaning you’re generally not personally liable for its debts or obligations.
• Tax flexibility – With the right setup, combining a salary with dividends can offer better tax efficiency, depending on your individual circumstances.
• Professional image: Adding 'Ltd' to your company name creates a sense of credibility, especially when working with larger organisations and public sector clients.

That said, setting up as a Ltd. isn't your only option. Partnerships or Limited Liability Partnerships (LLPs) may suit you better if you work jointly with others, or those who want shared control. Each business structure comes with different rights, obligations and tax implications, so it’s worth comparing these carefully or speaking to a professional advisor like an accountant before deciding which is right for you.

For a great starting point, check out our guide on types of business ownership structures.

Step 1: Choose a company name

Your company name needs to be unique. You can check whether the name you want is available using our company name checking tool.

Avoid restricted terms unless you have special permission (like “authority”, “association” etc.). And make sure a related domain is available if you’re planning a website.

Your company name doesn’t need to be flashy, but it should reflect how you want to be seen and give a strong impression of what you do – existing and potential clients will see it on invoices and contracts, or online if you advertise, have a website or social media.

Step 2: Register with Companies House

You can do this online through the official GOV.UK portal – or via Zempler Bank’s formations service.

You’ll need to provide:

• A registered office address, which will be publicly listed
• Details of directors and shareholders, as well as persons with significant control (PSCs)
• Share allocation, even if you're the only shareholder
• Identity verification for Companies House
• Your SIC code – a five-digit number that describes your business activity (consulting businesses often use codes like 70229 or 74909). You can select the right one from a SIC code list when registering your business.

Step 3: Register for tax

Once you've registered your company, you must inform HMRC it’s trading and register for Corporation Tax within three months of starting any business activity. You can do this on the GOV.UK registration page.

Depending on your situation, you may also need to:

• Register for VAT – If your taxable turnover exceeds £90,000 per year (as of 2025). If it’s below the threshold, you can still voluntarily register if you incur significant VAT on business expenses.
• Register for PAYE – If you plan to pay yourself a salary, employ others, or operate payroll. Even if you're the sole director and only employee, you may still need to register for PAYE to stay compliant with income tax and NI reporting.

It’s advisable to speak to a tax professional or accountant about the relevant taxes applicable, depending on your individual circumstances.

Step 4: Understand IR35 and off payroll working rules

This is a big one for consultants.

If you’re working under your company name with clients in a way that resembles employment, you could be affected by IR35 rules. These regulations determine whether you should be taxed as an employee, even if you invoice through a limited company.

This is a complex area with significant implications if you get it wrong. If you’re unsure whether IR35 applies to your contracts, talk to a specialist or tax adviser. GOV.UK also has more information on IR35.

Step 5: Open a business bank account

Once your company is set up, you’ll need a separate business bank account. Not only will a separate business account help you keep company and personal finances distinct, it’s also a legal requirement for limited companies to have one.

When comparing business bank accounts, you should consider:

• Monthly fees and transaction charges
• Setup speed and paperwork requirements
• Whether the account integrates with your bookkeeping software
• Support for expense tracking or real-time cash flow insights
• Customer service availability

Zempler Bank offers consultants a fast, digital-first account setup designed specifically for small businesses. No hidden fees, helpful money tools, and a UK-based support team.

Step 6: Stay on top of your obligations

Running a limited company comes with ongoing responsibilities. Here are some of the key obligations you'll face:

• Annual accounts – Must be filed with Companies House, usually within nine months of your company’s financial year-end.
• Confirmation statements (formerly called annual returns) – Due once every 12 months to confirm company details are up to date.
• Corporation Tax returns – due annually, with any tax owed needing to be paid within nine months and one day after your accounting period ends.
• Payroll – Reporting is required if you pay yourself a salary, with monthly real-time information (RTI) submissions via PAYE.

Late filings can result in penalties and damage your company’s standing, so make sure you keep track of deadlines and maintain accurate records. Many consultants find accounting software a helpful way to stay organised.

Final thoughts

For many consultants with growing client lists or long-term ambitions, transitioning into a limited company is a logical step.
While it comes with added responsibilities, it also offers more structure and protection, not to mention potential tax advantages. Take your time to compare structures, seek expert advice where needed, and choose tools that make the admin easier.

If you're looking for a business account that aligns with the pace and needs of your consultancy, Zempler Bank offers a seamless digital setup, transparent pricing and tools designed to help you stay in control – right from day one.