If you’re incorporating a company for the first time, you’ll quickly come across unfamiliar terms and documents. Learning what they mean will help you navigate the process with confidence and make informed decisions from day one.
To help you get started, here are 12 key terms every new business owner should know.
1) Companies House
Companies House is the UK government’s official register of companies. All limited companies must be incorporated through it. Key information — including details of directors, shareholders, and registered addresses — is recorded and made publicly available.
2) Certificate of Incorporation
This is the legal document issued once your company is successfully registered with Companies House. It confirms that your business exists as a separate legal entity and includes your company number and incorporation date.
3) Memorandum of Association
A Memorandum of Association is a legal statement signed by all initial shareholders or guarantors agreeing to form the company. It confirms their intention to become part of the business and, if the company is limited by shares, to take at least one share each.
4) Articles of Association
Your Articles of Association set out the internal rules for how your company operates — such as how directors are appointed, how decisions are made, and how shares can be issued or transferred. Most small businesses use standard ‘model articles’, but you can tailor them to fit your specific needs.
5) Share Capital
Share capital represents the total value of shares issued by the company. Each share gives the holder certain rights, such as voting or receiving dividends. Your initial share capital can be as little as £1, but it determines how ownership and control are divided.
6) Shareholder
A shareholder is an individual or entity that owns one or more shares in the company. Shareholders are the owners of the business and can receive dividends and vote on major company decisions.
7) Director
Directors manage the company’s day-to-day operations and ensure it meets all legal obligations. They act on behalf of shareholders and must always act in the company’s best interests. Every company must have at least one director.
8) Registered Office
The registered office is your company’s official address, listed on the public record. All official mail from Companies House and HMRC will be sent there. It must be a real UK address, but it doesn’t need to be the same as your trading address.
9) People with Significant Control (PSC)
A Person with Significant Control (PSC) is anyone who owns or controls more than 25% of a company’s shares or voting rights, or who has a major influence over how the company is run. Their details must be recorded in the PSC register and reported to Companies House to ensure transparency and accountability.
10) Limited Liability
Limited liability means that shareholders are only responsible for the company’s debts up to the amount they’ve invested in shares. This protection helps safeguard personal assets, ensuring they’re generally not at risk if the company encounters financial difficulties — one of the key advantages of forming a limited company.
11) SIC Code
The Standard Industrial Classification (SIC) code identifies the nature of your company’s business activity. You’ll need to choose at least one SIC code during incorporation so Companies House can categorise your business correctly.
12) Corporation Tax
Once incorporated, your company must pay Corporation Tax on its profits. You’ll need to register with HMRC, maintain accurate financial records, and file annual tax returns on time.
Staying compliant from the start helps you avoid costly penalties and keeps your business in good standing.
Final Thoughts
Understanding these key terms makes the incorporation process much easier and less intimidating. By knowing your responsibilities and the purpose of key documents, you’ll build a strong legal foundation for your business.
Start Your Company The Right Way
Your business deserves the best start — and at MYCO, we make that happen.
We handle every aspect of the company formation process, from Companies House registration to document preparation and full compliance. With our experts supporting you from day one, you can launch your company efficiently, confidently, and ready to grow.