Incorporation is the term used to describe the formation and registration of a limited company. When this process is complete, a certificate of incorporation will be issued. The legal status of a limited company is that it is a separate entity from the owners of that business. If you are self-employed and running a business, then that business is not legally a company until such time as it has been incorporated and been given a registered business name. Until this happens, you, as a self-employed person, are legally the business and thus responsible for any liabilities incurred by that business.
When you opt to incorporate your business, you create an organisation that has only limited liabilities. This means that any creditors of the business won’t be able to pursue you personally for any monies owed by the business. A limited company, once incorporated, can also have directors and shareholders and can employ people and make tax payments.
Any company that is incorporated in the UK in order to become a limited company has to do so via Companies House, as set out in the Companies Act 2006. It doesn’t matter whether the business in question is a startup or already exists in the form of a partnership or self-employed enterprise. In all cases, incorporation through Companies House is required by law.
