Yes, you can. In fact, it’s quite common for UK entrepreneurs to start and run a limited company on their own, without hiring any staff. Many small businesses begin with just one person at the helm—who may also be the sole shareholder and director—and then consider bringing on additional team members later.
If you’re thinking of starting a limited company with no employees, here’s what you need to know.
Sole Director Limited Companies
The law does not require a limited company to have employees. A company must have at least one director and that individual can also be the sole shareholder. As the sole director:
- You Have Full Control: You make all of the company’s decisions, set its direction and manage day-to-day operations.
- You Are Responsible for Compliance: You’ll handle all administrative tasks, including filing confirmation statements, submitting annual accounts, and staying on top of tax obligations.
- You Can Draw a Salary and Dividends: As a director, you can pay yourself a salary. As a shareholder, you can take dividends when the company makes enough profit. This provides flexibility in how you manage your personal income and tax efficiency.
No Employees, No Payroll?
If your limited company does not employ anyone else—and you don’t pay yourself a salary above the PAYE (Pay As You Earn) threshold—you may not need to register for PAYE or run a payroll system. Instead, you could pay yourself a small salary under the National Insurance threshold and take additional income as dividends.
Key points to consider:
- PAYE Registration: If you pay yourself a salary above the Lower Earnings Limit (LEL) or you provide yourself with benefits in kind, you’ll need to register for PAYE and make the necessary deductions for Income Tax and National Insurance.
- Dividends: Dividends are issued from company profits after Corporation Tax is paid. They are not subject to PAYE but are taxed differently through your self-assessment tax return. This can be a tax-efficient way to draw income if done properly.
Contractors and Freelancers
Running a limited company without employees doesn’t mean you have to do all the work yourself. Many single-director businesses rely on freelancers and subcontractors instead of taking on permanent staff. This approach offers flexibility, allowing you to scale up or down as needed without the obligations and costs associated with hiring employees.
However, when working with contractors:
- Check IR35 Rules: If you hire contractors who essentially act like employees, you may need to ensure compliance with IR35 legislation.
- Maintain Clear Contracts: Use well-defined agreements to set expectations, deadlines and payment terms to avoid misunderstandings.
Accounting and Compliance
Even with no employees, your limited company will still have annual responsibilities:
- Annual Accounts and Confirmation Statement:
You must file annual accounts with Companies House and submit a confirmation statement each year, confirming that the company details on record are up to date. - Corporation Tax Return:
Every limited company must file a Corporation Tax return with HMRC and pay any tax due on profits. If you’re the only person running the company, you’ll likely handle this yourself or through an accountant. - VAT Registration (If Applicable):
If your company’s turnover reaches the VAT threshold (currently £90,000 per year), you’ll need to register for VAT and submit regular VAT returns, regardless of the number of employees.
Advantages of Running a Limited Company Solo
- Control and Flexibility: You have complete autonomy over decision-making and the freedom to shape the company as you see fit.
- Cost Savings: With no staff salaries or additional employment costs, you can keep overheads low.
- Limited Liability: Operating as a limited company still provides personal liability protection, keeping your personal assets separate from the company’s debts.
Potential Drawbacks to Consider
- Workload: Handling all tasks alone can be time-consuming and may slow your business growth.
- Skill Gaps: You may lack certain skills or expertise, which could limit what you can achieve without bringing in outside help.
- Scaling Challenges: As your business grows, you may need to rethink your approach. Bringing on employees could become necessary to manage increased demand.
How We Can Help
At our company formation agency, we specialise in helping new business owners navigate the setup and management of their limited companies. Whether you’re just starting out on your own or considering how and when to scale up, we can assist with:
- Company formation and structuring
- Advice on paying yourself efficiently and staying tax-compliant
- Guidance on accounting and bookkeeping practices for one-person companies
- Support with VAT registration and compliance as you grow
Final Thoughts
Running a limited company with no employees is entirely possible and often a smart way to start a business in the UK. It allows you to keep overheads low, maintain control, and remain flexible, all while benefiting from the limited liability protection that a limited company offers.