2026 Business Formations Checklist

by/7th January 2026/inBusiness, Starting A Business, UK Startup
Formations Wise - 2026 business formations checklist

Starting a business in 2026 is still very achievable in the UK, but the days of setting up a company and ignoring compliance until later are firmly behind us. Regulatory oversight is tighter, digital reporting is expanding, and Companies House reforms are now actively reshaping how businesses are formed and maintained.

The most significant change for new company formations is Companies House identity verification.

From 18 November 2025, identity verification became a legal requirement for new company incorporations, with a 12-month transition period running throughout 2026 for existing directors and persons with significant control. This is not a future proposal or consultation. It is active law.

If you are forming a limited company in 2026, you must ensure that all required individuals are properly verified, either directly through Companies House or via a registered Authorised Corporate Service Provider (ACSP).

Failing to do this can delay incorporation, block filings, and create avoidable compliance issues from day one.

You can read the official guidance here:

This checklist is designed to help you:

  • Set up your company correctly the first time
  • Meet Companies House and HMRC requirements from day one
  • Avoid common early-stage mistakes that quietly cost time and money later
  • Build a compliant foundation that will not need fixing six months down the line

Whether you are launching a new venture, switching from sole trader to limited company, or forming a business for tax efficiency or protection, the steps below reflect how company formation actually works in 2026. Not how it worked five years ago.

Each section includes practical guidance, official resources, and real-world tips based on how UK companies are now registered, monitored, and maintained.

The 2-minute “are you ready to form?” checklist

Before you file anything with Companies House, it is worth taking two minutes to sanity-check the fundamentals. Most early formation problems are not caused by paperwork errors. They come from rushing decisions that should have been thought through once, properly, at the start.

Before you incorporate, make sure the following are clear and confirmed.

1. You are choosing the right business structure

Not every business should be a limited company. In 2026, the right structure depends on risk, income level, growth plans, and how you want to be taxed.

  • Sole trader: simple and low-cost, but no separation between you and the business
  • Limited company: more administration, but better protection and often more tax-efficient as profits grow
  • Partnership or LLP: useful where multiple people are involved and profits are shared

If you are unsure, review the official guidance first:

Tip: Changing structure later usually costs more in tax, time, and professional fees than getting it right now.

2. You have picked a company name you can actually use

A name being available at Companies House does not mean it is safe or practical to use. Before incorporating, check:

  • The name is available on the Companies House register
  • It does not include restricted or sensitive words
  • The matching domain name is available or affordable
  • Social media handles are not already taken by a similar business

Useful checks:

Tip: If branding matters to you, secure the domain name before you incorporate. Names can be changed later, but it creates friction and paperwork.

3. You know exactly who the directors and PSCs are

In 2026, this matters more than ever. You must be able to clearly identify:

  • All directors
  • All persons with significant control (PSCs)

A PSC is typically someone who:

  • Owns more than 25 percent of the shares
  • Controls more than 25 percent of voting rights
  • Has significant influence or control over the company

Official guidance: People with significant control explained

Tip: If ownership or control is unclear now, it will cause problems with identity verification, bank accounts, and future filings.

4. You have thought about shares and ownership properly

Even if you are the only founder, share structure matters. Decisions made at incorporation affect dividends, future investors, and exit options.

At minimum, you should know:

  • How many shares are being issued
  • Who owns them
  • Whether you may want to bring in others later

Tip: Issuing a simple structure now does not stop you changing it later, but sloppy setups often need professional corrections.

5. You are ready for identity verification requirements

Companies House identity verification is now part of company formation. If you are not ready for it, incorporation can be delayed or blocked.

From 18 November 2025:

  • New directors and PSCs must verify their identity
  • Verification can be completed directly or via an Authorised Corporate Service Provider
  • Unverified individuals cannot legally act

Official resource: Identity verification for Companies House

Bottom line: If any of the points above feel uncertain, pause and resolve them first. Fixing formation mistakes after incorporation is always slower and more expensive than getting it right at the start.

Phase 1: Pre-formation decisions (do this before you incorporate)

A clean company setup starts before you touch the Companies House incorporation form. The decisions made at this stage affect tax treatment, compliance workload, credibility with banks, and how easy it is to scale or change later.

Rushing incorporation without locking these down is one of the most common causes of avoidable problems in the first year.

1) Choose the right legal structure

A limited company is often the default choice because it offers limited liability and stronger commercial credibility. However, it is not always the simplest or most appropriate structure.

Before deciding, consider the following:

  • Risk exposure and contracts: Limited companies provide separation between you and the business, which matters where liability or client risk is higher
  • Profit expectations: Limited companies often become more tax-efficient as profits increase
  • Admin tolerance: Annual accounts, confirmation statements, payroll, and corporation tax filings are mandatory
  • Future plans: Bringing in investors, co-founders, or issuing employee shares is far easier through a company structure

Official guidance:

Tip: Switching from sole trader to limited company later is common, but it often triggers extra tax planning, accounting work, and administrative changes.

2) Confirm your company name is workable

A company name needs to work legally, commercially, and practically. Availability on Companies House alone is not enough.

Before incorporating, check for:

  • Companies House name similarity or conflicts
  • Restricted or sensitive words
  • Trademark conflicts if brand protection matters
  • Matching or acceptable domain availability
  • Social media handle availability

Useful checks:

Tip: If the brand matters, secure the domain name before you incorporate. Changing a company name later is possible, but it creates extra filings and brand confusion.

3) Decide the core company facts

Companies House incorporation requires a fixed set of core details. Having these confirmed in advance avoids delays and corrections.

You should have the following ready:

  • Registered office address, and whether you want privacy or professional address support
  • Director details, including full legal names and service addresses
  • Shareholders and share split
  • SIC code or codes describing your business activity
  • Articles of association, standard or bespoke

Helpful resources:

Tip: Standard articles work for many small companies, but they may not be suitable where there are multiple founders, unequal shareholdings, or future investment plans.

4) Understand PSC rules early

Most UK limited companies must maintain a register of People with Significant Control (PSCs) and report this information to Companies House.

A PSC is usually someone who:

  • Owns more than 25 percent of the company’s shares
  • Controls more than 25 percent of voting rights
  • Has the right to appoint or remove a majority of directors
  • Exercises significant influence or control

PSC details must be kept up to date and reported whenever changes occur.
Failure to do so can result in penalties and compliance issues.

Official guidance: People with significant control (PSC) guidance

Tip: Getting PSC details right at formation makes identity verification, bank account opening, and future filings significantly smoother.

Phase 2: Incorporation (Companies House filing checklist)

Once your pre-formation decisions are locked in, the incorporation itself is straightforward. However, accuracy at this stage matters far more than speed. Errors made during filing tend to resurface later as bank delays, rejected filings, or costly corrections.

5) File incorporation accurately (avoid the pain later)

Companies House incorporation is largely automated, which means incorrect information is rarely challenged at the point of filing. Instead, mistakes usually surface months later when:

  • You try to open a business bank account
  • An investor or lender performs checks
  • HMRC or Companies House queries your records

Common incorporation issues include:

  • Incorrect registered office address or mismatched director service details
  • Messy share structures, especially with multiple founders or unequal ownership
  • Incorrect SIC codes that do not reflect what the business actually does
  • Shareholdings that do not match reality, particularly where control and ownership differ

Before submitting your application, double-check:

  • All names match official identification documents exactly
  • Addresses are current and correctly formatted
  • Share allocations reflect how profits and control are intended to work
  • SIC codes accurately describe your current and planned activities

Helpful resources:

Tip: If you expect future investors, co-founders, or employee share schemes, it is far easier to design a clean structure now than to unwind a rushed one later.

6) Identity verification: build it into your formation process (2026-critical)

Identity verification is no longer optional. From 18 November 2025, Companies House identity verification became a legal requirement, with a 12-month transition period running through 2026.

This affects:

  • New company incorporations
  • New director appointments
  • New PSC registrations

Practical takeaways for forming a company in 2026:

  • All new directors and PSCs must meet identity verification requirements as part of incorporation or appointment
  • Verification can be completed directly through Companies House or via an Authorised Corporate Service Provider (ACSP), such as an accountant or solicitor
  • If you use an agent to verify identities, they must be registered as an authorised ACSP

Official guidance:

Verification typically requires:

  • Valid photographic identification
  • Supporting personal details
  • Additional checks for non-UK residents

Tip: Where there are multiple directors or PSCs, especially non-UK residents, plan identity verification early. Leaving this until the last minute is one of the most common causes of delayed incorporations and rejected filings in 2026.

Once incorporation is complete and identities are verified, you can move on to HMRC registrations, banking, and post-incorporation compliance.

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Phase 3: The first 30 days after incorporation setup checklist

Incorporation is only the starting point. The first 30 days are where many new companies either build a clean compliance foundation or sleepwalk into avoidable problems.

The actions below help ensure your company is recognised correctly by HMRC, pays you properly, and is ready to trade without future surprises.

7) Set up your HMRC baseline

Once your company starts trading or becomes active, you must tell HMRC that it is liable for Corporation Tax. This must be done within three months of starting your tax accounting period.

Official guidance: Register for Corporation Tax (GOV.UK)

If your company is dormant for a period, it still needs to be handled correctly. Dormant status must be confirmed with HMRC and Companies House to avoid incorrect tax demands or penalties.

Dormant companies explained

Tip: Do not wait until your first set of accounts is due. Late registration is a common cause of HMRC correspondence and compliance stress in year one.

8) Decide how you will pay yourself

Directors must decide early how they will extract money from the company. This affects tax, cash flow, and reporting obligations.

The main options are:

  • Salary, paid through PAYE
  • Dividends, paid from post-tax profits
  • A combination of both

If you will run payroll, you must register as an employer before your first payday and submit payroll information in real time.

Official resources:

Tip: Paying yourself without payroll or dividend paperwork creates director loan issues that are expensive to unwind later.

9) VAT: decide early and plan properly

As of current published policy, the UK VAT registration threshold is £90,000 of taxable turnover over a rolling 12-month period.

Official guidance: VAT registration and thresholds (GOV.UK)

Even if you are below the threshold, VAT should be considered early. Factors include:

  • Whether your clients are VAT-registered and can reclaim VAT
  • Whether you incur significant VAT on costs
  • How quickly your turnover may grow

2026 note: VAT thresholds and schemes can change following Budgets. Always re-check current rules before setting prices or long-term contracts.

10) Data protection: check if you need to pay the ICO fee

Most UK businesses that process personal data must pay a data protection fee to the Information Commissioner’s Office, unless they qualify for an exemption.

This applies to businesses that:

  • Market to customers
  • Maintain staff or contractor records
  • Use CRM systems
  • Collect leads or enquiries through a website

ICO guidance: Data protection fee explained (ICO)

Tip: Many small companies miss this entirely. The ICO can issue penalties for non-payment, even where the business is otherwise compliant.

11) Business bank account and finance stack

Keeping business and personal finances separate is essential from day one. This is both a legal and practical requirement for limited companies.

At minimum, you should set up:

  • A dedicated business bank account
  • Bookkeeping software with live bank feeds
  • A receipt capture process for expenses
  • Invoice templates showing correct company details

Helpful reference: Running a limited company (GOV.UK)

Tip: Mixing personal and company spending creates accounting issues and weakens the limited liability protection you set up the company for.

Phase 4: Ongoing compliance (what keeps you in good standing in 2026)

Once your company is formed and trading, ongoing compliance is what keeps it credible, bankable, and legally protected.  In 2026, Companies House is more active, more data-driven, and far less tolerant of stale or inaccurate records.

The obligations below are not optional, and they apply even if your company is small, owner-managed, or relatively inactive.

12) Confirmation Statement (every year, no excuses)

Every UK limited company must file a confirmation statement at least once every 12 months. This confirms that the information held by Companies House is accurate and up to date.

Key points:

  • You must file within 14 days of the end of your review period
  • The statement must be filed even if nothing has changed
  • Failure to file can result in penalties and company strike-off action

Official guidance: File your confirmation statement (GOV.UK)

Tip: Treat the confirmation statement as an annual compliance audit. It is your opportunity to catch errors before they cause problems with banks, lenders, or HMRC.

13) PSC updates (keep it current)

Companies must keep their People with Significant Control information accurate at all times. If a PSC’s details change, you must update Companies House promptly.

This includes changes to:

  • Ownership percentages
  • Voting rights
  • Control arrangements
  • Personal details or service addresses

Once a change is confirmed, it must be reported to Companies House within 14 days.

Official guidance:People with significant control guidance (GOV.UK)

Tip: PSC issues often surface during bank reviews, funding applications, or identity verification checks. Out-of-date records are one of the fastest ways to trigger compliance queries.

14) PSC identity verification timing (a detail many will miss)

Identity verification requirements for PSCs include specific timing rules that differ depending on the individual’s role. This is an area where many businesses are likely to make mistakes in 2026.

Key points to be aware of:

  • PSCs must complete identity verification within required timeframes
  • If a PSC is also a director, different verification timing rules may apply
  • Changes in PSC status can trigger fresh verification obligations

Government guidance: Identity verification for Companies House

For businesses with multiple companies, layered ownership, or complex share structures, relying on memory is risky.

Tip: Build a recurring compliance review into your operations. A quarterly check of confirmation statements, PSC records, and identity verification status is a sensible baseline in 2026.

Good compliance is not about over-admin. It is about keeping your company usable, credible, and protected as rules tighten.

High-value extras (often skipped, always regretted later)

These are the elements that rarely feel urgent during formation, but regularly cause disputes, legal costs, or operational headaches later. They are not legally required on day one, but they are among the highest leverage decisions you can make early.

Founders’ agreement or shareholders’ agreement

If there is more than one founder or shareholder, a written agreement is strongly recommended.
This applies even where the relationship is friendly and informal.

A shareholders’ or founders’ agreement typically covers:

  • Decision-making powers and voting rights
  • What happens if someone wants to leave
  • How shares can be transferred or sold
  • What happens in the event of a dispute

Tip: Many founder disputes start with “we never thought we would need this”. Agreements are far cheaper to put in place before anything goes wrong.

Intellectual property ownership

It must be clear who owns the intellectual property used by the business. This includes logos, branding, websites, software, content, designs, and product ideas.

Common problem areas include:

  • Work created before incorporation
  • Contractors or freelancers creating assets
  • Co-founders assuming ownership without documentation

Tip: If the company relies on IP to trade, ensure ownership is formally assigned to the company. This is critical for investment, sale, or dispute scenarios.

Basic commercial contracts

Even simple businesses benefit from having basic contracts in place. Relying on informal emails or assumptions creates unnecessary risk.

At a minimum, consider:

  • Terms and conditions for customers
  • Service agreements or proposals
  • Clear payment terms and scope definitions

Tip: Contracts are not about being aggressive. They are about clarity, expectations, and protecting both sides when things change.

Business insurance

Insurance is often overlooked by new companies, particularly in professional or digital sectors. However, a single claim can undo years of work.

Depending on your activity, you may need:

  • Professional indemnity insurance
  • Public liability insurance
  • Employers’ liability insurance if you hire staff

Tip: Some clients, suppliers, or platforms require proof of insurance before working with you. It is easier to arrange early than under pressure.

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Build a compliance calendar

Many compliance failures are not caused by complexity, but by missed dates. A simple compliance calendar removes most of the risk.

Your calendar should include:

  • Confirmation Statement due date
  • Statutory accounts deadlines
  • Corporation Tax payment and filing dates
  • PAYE submission dates
  • VAT return deadlines, if registered

Tip: If you run multiple companies or have complex ownership, schedule a quarterly compliance review rather than relying on annual reminders.

These extras do not slow your business down. They reduce friction, prevent disputes, and make the company easier to grow, fund, or exit.

Official resources (bookmark these)

The guidance below comes directly from official UK government and regulatory sources.
If you are forming or running a company in 2026, these are the pages you will return to repeatedly.

Tip: Rules and thresholds can change following Budgets or regulatory updates. Always check the live guidance before making pricing, payroll, or compliance decisions.

A simple 2026-ready formation plan

If you want a clean, low-friction approach to forming a company in 2026, this sequence avoids the vast majority of early-stage issues.
It prioritises accuracy, compliance, and timing over speed.

  1. Pre-check the fundamentals
    Confirm your company name, ownership structure, SIC code selection, registered office address, and PSC details before you file anything. These decisions underpin every later compliance obligation.
  2. Plan identity verification before you incorporate
    Decide whether directors and PSCs will verify directly with Companies House or via an Authorised Corporate Service Provider. Do not treat verification as an afterthought. Identity verification guidance (GOV.UK)
  3. Incorporate the company
    File with Companies House once all details are confirmed and verification planning is in place. Accuracy here reduces future corrections, delays, and compliance risk.
  4. Within 30 days: banking, bookkeeping, and Corporation Tax activation
    Open a business bank account, connect bookkeeping software, and notify HMRC that the company is active for Corporation Tax. Register for Corporation Tax
  5. If paying anyone, set up PAYE before payday
    Register as an employer and ensure payroll reporting is ready before any salary is paid. 
    Register as an employer (PAYE)
  6. Set a compliance calendar
    Track your Confirmation Statement deadline, statutory accounts dates, PSC reviews, and identity verification obligations. Regular reviews reduce the risk of missed filings. Confirmation Statement guidance (GOV.UK)

This approach is not about slowing you down. It is about forming a company that remains compliant, usable, and credible as rules tighten through 2026 and beyond.

Forming a company in 2026 does not need to be complicated

The rules around company formation, identity verification, and ongoing compliance are tighter than they used to be, but they are also clearer. Most problems arise not because the process is difficult, but because key steps are rushed, skipped, or handled in the wrong order.

A well-formed company should be:

  • Set up correctly the first time
  • Compliant with Companies House and HMRC requirements
  • Easy to run, bank, and grow
  • Free from avoidable admin fixes six months later

That is exactly what Formations Wise is built for.

Whether you are forming your first limited company, restructuring an existing business, or navigating Companies House identity verification in 2026, Formations Wise helps you:

  • Incorporate accurately with the right structure from day one
  • Handle identity verification correctly, including ACSP-supported routes
  • Set up registered office and director address services where needed
  • Avoid the common compliance mistakes that slow businesses down

If you want your company set up cleanly, compliantly, and ready to operate without friction, you can make getting it right at the start is still the cheapest and simplest compliance decision you will ever make.

All with Formations Wise.

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Formations Wise is a trading style of Accounting Wise Ltd, a limited company registered in England under company number 09365202. Our registered office is: The Carriages, Station Road, Ware, SG12 9PL UK.

Content is for general information only. Always take advice.

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