New data released by Companies House and The Office for National Statistics confirms that the UK is back to its entrepreneurial best after suffering a Covid-induced dip in company formations. In this post, we take a look at the numbers behind this optimistic news. Let’s get started.
The UK’s official registrar of companies
Companies House is the United Kingdom’s official registrar of companies. This means that all new company registrations (and closures) must be approved by Companies House.
As well as overseeing the formation of companies, Companies House also maintains a publicly viewable register online, and it’s from the increase in this register’s numbers that we can glean this positive news about the UK’s growing business population.
A record year for company formations
In 2022, 784,103 new companies were formed in the UK, an all-time-high figure. This is great news in itself, but particularly good when you realise that formations were down in 2021 for the first time since 2017. So, to see a return to healthy company formation figures is welcome news and indicates that the UK – from an entrepreneurial slant at least – is recovering from the pandemic.
Company formations in the last 10 years (Green indicates an increase in new companies, red a drop)
|Year||No. of new companies formed|
As you can see, over the past ten years there has been regular year-on-year growth in the number of new companies being added to the register, with the exception of 2017 and 2021.
Company formations vs company dissolutions
Of course, as new companies are born, a certain amount of companies will cease to exist.
A company dissolution is the act of a company being struck off (closed) on the Companies House register. A company can be dissolved either voluntarily by its owners (e.g. the business has simply run its course) or involuntarily (e.g. the company has failed to submit a confirmation statement).
2022 witnessed 572,694 company dissolutions. As is the norm, more companies were formed than companies dissolved. In fact, in 2022, the gap between formations and dissolutions was the third largest it’s been over the last ten years.
Company formations compared to company dissolutions in the last 10 years
|Year||Companies formed||Companies dissolved||Net increase|
In less positive news – but as would be expected – the data highlights just how many companies did feel the ill effects of the pandemic and had to shut shop (in both 2021 and 2022).
The dissolution process can be a drawn-out one, with it generally taking around 3 months from the first winding-up notice (this appears in The Gazette) to the actual dissolution – but times can vary depending on the particular case. It’s therefore worth mentioning that a number of companies will have started the dissolution process in the year before it was actually dissolved.
The number of companies on the Companies House register
As we’ve covered above, company formations consistently outdo company dissolutions, so the register is constantly growing, but by how much?
Companies on the (effective) Companies House register in the last 10 years
|Year||No. of companies on the register||Year-on-year growth|
This begs the question, just how entrepreneurial are we?
Roughly speaking – with 4,575,476 companies on the register at the end of 2022 – approximately every tenth person you come across (who is at least 16 years old, the minimum age for a company director) is running their own company.
Please note, the effective register discounts companies that are going through the dissolution or liquidation process – so does not include companies that will shortly be closed down. However, it does still include dormant companies (companies that are not partaking in any significant trading activity).
The different company structures
When we look at the company structures that prospective business owners are choosing to move forward with (once they have decided that they don’t want to go down the sole trader route), the private company limited by shares option is easily the most popular, with an overwhelming 93.1% of companies formed in the UK taking up this model. And it’s no surprise, as this is the recommended business structure for the majority of businesses that wish to make a profit.
The types of companies that are being formed
|Company structure||% of companies formed|
|Private company limited by shares||93.1%|
|Private company limited by guarantee||3.4%|
|Limited liability partnership||1%|
|Other (including public limited companies and overseas companies)||1.4%|
So there you have it
As demonstrated by the data, whilst suffering an understandable blip in 2021, the UK has rediscovered its entrepreneurial spirit and formed a record amount of companies in 2022.
These new businesses will no doubt face challenging periods, but as we have heard from successful entrepreneurs time after time, there really is no ‘perfect’ time to start a business. You’ve just got to get out there and take the leap.
We’ll be sure to keep you updated throughout the year as more updates from Companies House and The Office for National Statistics come through. Watch this space!
Is it time to form your company?
If you’re ready to turn that budding business idea into a fully flourished venture – and add your company to the Companies House register – we can help.
We offer a number of company formation packages that will get your new enterprise up and running in a matter of hours.
Whether you want to form a private company limited by shares, a limited by guarantee company, a limited liability partnership, or a public limited company, our expert services will guide you through the entire company formation process – from picking your company name, right up to submitting your application to Companies House.
If you have any questions along the way, our team of dedicated company specialists will be on hand to assist via email, live chat, or telephone. What are you waiting for? See the links below to start your business adventure:
- Our private company limited by shares packages
- Our private company limited by shares package for non-UK residents
- Our limited by guarantee package
- Our limited liability package
- Our public limited company package
Thanks for taking the time to read this post. Please leave a comment if you have any questions.