The United Kingdom is one of the biggest tourist hotspots in Europe. After all, this country is home to sites such as Big Ben and Buckingham Palace. However, you might not be aware that the UK is also an economic hub that attracts entrepreneurs and business people from across the globe.
It is believed that approximately over 800,000 businesses are incorporated in the UK each year. This reinforces the notion that the UK is a great place to start a new business. If you too are interested in starting a business in the UK, you might be wondering how to proceed.
In this guide, we will discuss how non-residents can start a business in the UK. We hope this guide will inform you about the various steps involved in starting a new business as well as the various regulations associated with starting a business in the UK.
Choose a Business Name
The first and most vital step in founding a business in the UK is to select a suitable business name. This name helps you stand out from others in the industry and can colour people’s perceptions of your brand. For this reason, you should spend some time coming up with a name that is memorable and stands out.
It is also vital to ensure that the business name you choose hasn’t already been used by any existing enterprise in the United Kingdom.
You can check if your current business name is already in use by looking it up on the UK Government’s website.
Set a Suitable Business Plan
Every great business is executed using a corresponding business plan. This business plan describes the business’s financial resources and goals. It also informs potential investors about the business’s capabilities as well as where it will venture in the future. Therefore, business owners will refer to this business plan whenever they need to make a major step in their business.
For this reason, business owners should take the time to ensure their business plan aligns with British laws and provides sufficient guidance in different situations.
Select a Business Location
Prospective business owners must then select a business location within a suitable area. This step can be tricky depending on the business’s intended goal.
For example, if the business owner intends to set up their business in a major UK city such as London or Manchester, they will need to pay high rent for the location space. Such business owners will need to pay a much lower rent if they decide to set up their operations in smaller UK cities.
Business owners will also need to consider other location factors, such as how far their office will be from public transit routes or commercial areas. The ideal business location is usually one that is easy to access and is located in a region frequented by the business’s target audience.
Select a Business Type
Every business operating in the UK must fall under a specific category. This includes businesses operated by non-residents.
Some of the most popular business types include:
Sole Trader
Sole trader businesses are great for business owners that intend to work as self-employed individuals who plan to operate their businesses on their own.
Such business owners are expected to follow the following requirements:
- Maintaining their expenses and earnings
- Filing self-assessment tax returns each year
- Paying income tax
- Paying their corresponding Class 2 and Class 4 national insurance regularly
Partnerships
Partnerships are great for businesses operated by two or more individuals. This business structure is relatively similar to the sole trader in many areas. However, the key difference is that it includes a legal agreement between multiple business owners.
If you intend to form a partnership, you will need to choose a suitable business name and mention your nominated partner in the business agreement. You will also need to register your business with HM Revenue and Customs (HMRC).
It is vital to choose a “nominated partner” who can administer your business’s tax returns and keep track of your business’s finances.
Limited Companies
The limited company structure is a great option for private companies that have a dedicated director who can oversee the company and report back to the company’s shareholders. The company’s founder is still responsible for the company’s finances in this structure.
Sole individuals employed by a particular company are also allowed to register the business as a limited company as long as they appoint themself as the director.
As the director, they must perform the following duties:
- Follow the company’s standards in accordance with the business’s articles of incorporation
- Oversee the company’s activities and note any changes that deviate from the initial business plan
- File the company’s accounts and tax returns
- Keep track of paying corporations’ tax
As the company director, you are still permitted to hire employees. However, you must keep track of key company finances. So you will need to keep a close eye on the company accounts, records, and other performance aspects.
Your company will have its own corporate bank account that is subject to corporate taxes as it is a distinct legal entity. You can also choose to register your corporate tax at the same time as your business’s registration. However, it is vital to note that all your business’s profits will be taxed, so you won’t be able to enjoy any tax-free exemptions.
Limited Liability Partnerships
Limited Liability Partnerships (LLC) are well suited for businesses that consist of two or more partnerships. As a member of an LLC, you will be referred to as a “corporate member”. You and the other corporate members are required to pay their associated share of taxes of corporate profits. However, you won’t be liable for any of the obligations the business isn’t able to pay.
You can form a limited liability partnership if you have a minimum of two members, possess an agreement describing how you intend to run your business and have registered your business as a Limited Liability Partnership with Companies House.
Register Your Business
Once you have completed all the aforementioned steps, you must register your business with Companies House. This registration process is relatively straightforward and involves filling out the appropriate forms and paying a registration fee.
Open an Online Bank Account
It is vital to open an online bank account for your business, regardless of the business type you have chosen. This is because all your business activities will need to be conducted using a bank account.
The good news is that it is possible to set up an online bank account in the UK, even if you are a non-resident. You can do this by demonstrating the following:
- Legal ownership of the business
- Possessing a UK business address for the business
- Proof that the business is registered with Companies House
- Providing the business’s most recent financial records
- The business plan or that the business has engaged in trading activities
If you intend to set up a UK bank account from outside the UK, you should consider using online payment solutions from a third-party. The company formation agents at OpenAEuropeanCompany can help match you with a suitable third-party online payment solutions provider that can assist you in this area.
Start Operating Your Business
Once this is complete, you can legally operate your business in the UK according to your business plan.
You should note that you must inform Companies House if you make any major changes to your business. This includes changes to:
- The company name
- The company address
- The company’s operations
- The company’s directors
- The company’s constitution
You must inform Companies House about these changes within 14 days of making them. This ensures the agency possesses up-to-date information on your business.
Why Choose OpenAEuropeanCompany?
As you can see, starting a business in the UK as a non-resident is a multi-step process. You can use the steps described above as a guideline for starting your new business venture in the UK. However, it is always best to use the services of experienced professionals during the company set-up process.
Consider reaching out to OpenAEuropeanCompany if you need help with setting up your business in the UK or if you need assistance with finding a suitable third-party online payment solutions provider. Our company formation agents are experienced in helping business owners set up a branch or subsidiary in the UK and across Europe and can assist you in various ways.