Many event organisers start as sole traders and eventually consider setting up a limited company. Incorporation offers benefits including limited liability protection, potential tax advantages, and a more professional image. But it also brings additional responsibilities and costs. This guide walks you through the process and helps you decide whether it is the right move for your event business.
Sole trader vs limited company: a quick comparison
As a sole trader, you and your business are legally the same entity. This means your personal assets are at risk if the business has debts. You pay income tax and National Insurance on your business profits, and your reporting obligations are limited to an annual self-assessment tax return.
A limited company is a separate legal entity. The company owns its assets and is responsible for its debts. Your personal liability is limited to the amount you have invested (usually the nominal value of your shares). The company pays corporation tax on its profits, and you pay yourself through a combination of salary and dividends. You have additional reporting obligations including annual accounts filed at Companies House and a separate corporation tax return filed with HMRC.
When does incorporation make sense?
Consider incorporating when:
- Your profits are consistently above £30,000 to £40,000 per year -- At this level, the combination of a director's salary, dividends, and corporation tax can be more tax-efficient than sole trader income tax and National Insurance. The exact tipping point depends on your personal circumstances, so consult an accountant for specific advice.
- You want limited liability protection -- Events carry risks. If something goes wrong (a lawsuit, a venue dispute, an unpaid supplier), limited liability protects your personal assets. Note that limited liability is not absolute. Directors can still be held personally liable in certain circumstances, and banks may require personal guarantees for loans.
- You work with corporate clients -- Some businesses prefer or require working with limited companies rather than sole traders, particularly for larger contracts.
- You want to take on partners or investors -- A company structure makes it straightforward to issue shares, bring in co-directors, or attract investment.
- You are building a business to sell -- A limited company is an asset that can be sold. A sole trader business is harder to separate from the individual.
Step-by-step: setting up your company
Step 1: Choose a company name
Your company name must be unique and not too similar to an existing registered company. You can check availability on the Companies House name search at gov.uk. The name must end with "Limited" or "Ltd" (or the Welsh equivalent if applicable). Avoid names that suggest a connection with government or that require special permission (words like "Royal", "British", "Authority").
Step 2: Decide on directors and shareholders
A private limited company needs at least one director who is a real person (not another company) and at least one shareholder. The director and shareholder can be the same person. If you are setting up a company for your event business on your own, you will typically be the sole director and sole shareholder.
Step 3: Choose a registered office address
Every company must have a registered office address in the UK. This address is publicly visible on the Companies House register. It does not have to be where you work, and many people use their accountant's address or a registered office service rather than their home address for privacy reasons.
Step 4: Prepare your articles of association
The articles of association are the rules that govern how the company is run. For most small event businesses, the model articles provided by Companies House are perfectly adequate. You can adopt these as they are without modification.
Step 5: Register with Companies House
You can register online at gov.uk/set-up-limited-company. The online process takes about 30 minutes and costs £12 (or £30 for same-day registration). You will need to provide:
- Company name
- Registered office address
- Director details (name, date of birth, nationality, address)
- Shareholder details and share allocation
- SIC code (Standard Industrial Classification) -- for event management, common codes include 82300 (organisation of conventions and trade shows) and 90010 (performing arts)
- A statement of capital (how many shares you are issuing and their nominal value)
Once registered, you will receive a certificate of incorporation and your unique company number. Your company is now a legal entity.
Step 6: Register for Corporation Tax
You must register for Corporation Tax with HMRC within three months of starting business activity. This is a separate process from the Companies House registration. You can register online at gov.uk.
Step 7: Set up a business bank account
Your limited company must have its own bank account. Company money and personal money must be kept completely separate. See our guide on getting a business bank account for more on this.
Step 8: Set up payroll
If you are going to pay yourself a salary (which is the standard arrangement for tax efficiency), you need to register as an employer with HMRC and set up a PAYE scheme. Your accountant can handle this, or you can do it yourself through HMRC's online services.
Ongoing obligations
Running a limited company comes with annual obligations:
- Confirmation statement -- An annual filing with Companies House confirming your company details are up to date. Cost: £13 (online). Deadline: within 14 days of your confirmation date each year.
- Annual accounts -- Financial accounts must be filed with Companies House within nine months of your accounting year end. Small companies can file abbreviated accounts, but full accounts are required for HMRC.
- Corporation Tax return -- Filed with HMRC within 12 months of your accounting year end. Corporation tax must be paid within nine months and one day of your year end.
- Payroll reporting -- If you run payroll, you must report to HMRC each time you pay yourself or employees (Real Time Information).
- VAT returns -- If VAT-registered, quarterly returns are required. See our VAT guide for event organisers.
Tax efficiency: salary and dividends
As a limited company director, you typically pay yourself through a combination of a small salary and dividends. The salary is a business expense that reduces your corporation tax bill. Dividends are paid from post-tax profits and are taxed at lower rates than salary income.
The optimal salary level changes each tax year based on National Insurance thresholds. Most accountants recommend a salary at or just below the National Insurance Primary Threshold, with the rest of your income taken as dividends. This is a significant advantage of limited company status, but the exact figures depend on your personal circumstances and change with each budget. Your accountant will advise on the optimal split for your situation.
Costs of running a limited company
The additional costs compared to sole trader status include:
- Accountancy fees (typically £800 to £2,500 per year for a small company, higher than sole trader accountancy fees)
- Companies House filing fees (£13 for confirmation statement, no charge for accounts)
- Registered office service (if using one, typically £50 to £150 per year)
- Payroll software or payroll service fees
- Time spent on additional administration
These costs need to be weighed against the tax savings and liability protection that incorporation provides.
Common mistakes when incorporating
- Incorporating too early -- If your profits are modest, the additional costs and admin of a limited company may outweigh the benefits. Get advice from an accountant before making the switch.
- Treating company money as personal money -- Once incorporated, the company's money is not yours. You cannot simply withdraw cash whenever you like. All payments to you must go through payroll or dividends.
- Forgetting filing deadlines -- Late filing with Companies House results in automatic penalties starting at £150 and increasing the longer you delay. Late corporation tax returns also attract penalties from HMRC. Set calendar reminders for every deadline.
- Not maintaining proper records -- Limited companies have stricter record-keeping requirements than sole traders. Keep all financial records, meeting minutes (even if you are the only director), and corporate documents organised and accessible.
For more on managing your event business finances, see our guide to accounting basics for event businesses.
Disclaimer: This article provides general guidance about setting up a limited company and is not a substitute for professional legal or tax advice. Company law and tax regulations change regularly. Always consult a qualified accountant or solicitor before making decisions about your business structure.
