Can I hire someone before the company is incorporated?
By SuLe · Updated 12 June 2026
You can, but it is risky: a company cannot be a party to a contract before it legally exists, and anyone who signs "for" an unformed company is personally liable under the Companies Act 2006. The clean route is to incorporate first — usually same-day online — then sign in the company's name.
Key facts
- A company cannot be party to a contract before it exists; a person who signs "for" an unformed company is personally liable (Companies Act 2006, s.51).
- A pre-incorporation contract is not automatically taken over by the company once formed — it usually needs to be novated.
- UK companies can be incorporated online, often same-day, so waiting is rarely a real obstacle.
- Work created before incorporation is not automatically owned by the company; you need an IP assignment into it.
- If you must start early, engage the person personally, then novate to the company immediately after incorporation.
What is the legal problem with hiring pre-incorporation?
A company only becomes a legal person when it is incorporated at Companies House. Before that, there is no entity to employ anyone or to hold a contract, so a contract "with the company" is a contract with something that does not yet exist.
The Companies Act 2006, section 51 resolves who is bound: the individual who purports to act for the unformed company is personally liable on the contract, subject to any agreement to the contrary. Signing "for and on behalf of NewCo Ltd" before NewCo exists makes you, personally, the employer.
That personal liability is the core risk. If things go wrong — a wage claim, a dispute, a notice period — it lands on you as an individual, not on a company that can shield you.
Does the company automatically take over the contract?
No — and founders often assume it does. Incorporation does not retrospectively make the new company a party to an agreement signed before it existed.
To move the contract onto the company, you generally need to novate it: the individual, the new company and the employee agree to replace the original contract with a fresh one in the company's name. A simple novation deed or a new employment contract dated after incorporation does the job.
Until novation happens, the original signatory keeps the personal liability. So even where an early hire is unavoidable, tidying it up promptly after incorporation matters as much as the initial paperwork.
What is the safe way to bring someone on early?
Incorporate first. Because UK companies can be formed online, frequently on a same-day basis, the delay is usually minimal — and it removes the personal-liability problem entirely. Once the company exists, sign the employment or consultancy contract in its name.
If you genuinely cannot wait, engage the person personally under a clear written agreement, then novate to the company the moment it is incorporated. Build the novation into your incorporation checklist so it does not slip.
Do not overlook IP. Anything created before the company exists — code, designs, branding — is not automatically owned by it. Include an assignment of that pre-incorporation work into the company once formed, or you may find the business does not cleanly own its earliest and most important assets.
| Approach | Personal liability? | Cleanliness |
|---|---|---|
| Sign "for" company before it exists | Yes — you are personally liable (s.51) | Poor; needs later fix |
| Incorporate first, then sign | No | Cleanest option |
| Engage personally, then novate | Removed on novation | Acceptable if novated promptly |
| No written terms at all | Yes, plus dispute risk | Worst option |
Worked example
Yusuf is building a marketplace and wants a developer to start before he has incorporated. Tempted to sign an employment contract "for" the yet-to-exist company, he learns that under section 51 that would make him personally liable as the employer.
Instead, Yusuf incorporates his company online that afternoon and signs the contract in the company's name the next morning — including an express IP assignment so the developer's code belongs to the company. Where a few days' work happened before incorporation, he adds an assignment of that early code into the company. When investors later run due diligence, the ownership chain is clean from day one.
Where founders go wrong
Signing "for NewCo Ltd" before it exists
— section 51 makes you personally liable on that contract.Assuming the company inherits the contract on formation
— it does not; you usually have to novate.Forgetting pre-incorporation IP
— early code and branding are not automatically owned by the company without an assignment.Delaying the tidy-up
— personal liability persists until the contract is novated, so do it right after incorporation.
Related questions
What happens if I sign a contract for a company that doesn't exist yet?
Under the Companies Act 2006 (section 51), a person who makes a contract on behalf of a company before it is incorporated is personally liable on that contract. So if you sign "for" a company that has not yet been formed, you — not the future company — are on the hook.
Can the company take over the contract once it's formed?
Not automatically. The new company can't simply inherit a pre-incorporation contract; the parties usually have to novate it — sign a fresh agreement, or a novation, once the company exists. Until that happens, personal liability remains with whoever signed.
What's the safest way to bring someone on early?
Incorporate first — UK companies can be set up online, often same-day — then sign the contract in the company's name. If you genuinely must start sooner, engage the person personally on clear terms and novate to the company immediately after incorporation, ideally with an IP assignment.
Does this affect who owns the work done before incorporation?
Yes. Work done before the company exists is not automatically owned by it. You need an assignment of any IP created in that period into the company once formed, or the company may not cleanly own early code, designs or branding — a common due-diligence problem. [More: How do I transfer pre-incorporation IP into my company?]
Hiring before you incorporate can quietly make you personally liable and leave your company without clean ownership of its earliest work — both of which surface in due diligence. A SuLe solicitor can sequence your incorporation, contracts and IP assignments correctly. Book a free consultation about your contracts before anyone starts.
Keep reading: How do I hire my first employee in the UK (legal checklist)? · What must a UK employment contract include? · How do I transfer pre-incorporation IP into my company? · Who owns the IP my employees and contractors create? · Do I need a consultancy agreement for a fractional CTO?
Primary sources: GOV.UK — Employment contracts · Acas — advice and codes of practice
