If you are a foreigner who dreams of starting a business in the UK, you should know that the UK offers many advantages for entrepreneurs, such as a large and diverse market, a strong economy, and a favourable business environment. However, you should also be prepared for some challenges and requirements that you need to meet and follow when starting a business in the UK as a foreigner.
Choose a Business Structure
The first step to starting a business in the UK as a foreigner is to choose a business structure that suits your needs and goals.
To ensure you get this right, you might want to contact a company formation agent such as CG Incorporations. They will be able to help you with all aspects of setting up your company and make the whole process easy.
The business structure determines how your business is run, taxed, and regulated. There are four main types of business structures in the UK:
- Sole trader: This is the simplest and most common type of business structure in the UK, where you are the sole owner and operator of your business. You have full control and responsibility over your business, and you keep all the profits. However, you also have unlimited liability for your business debts and obligations, and you have to pay income tax and national insurance on your profits.
- Partnership: This is a type of business structure where two or more people share the ownership and management of a business. You have to register your partnership with HM Revenue and Customs (HMRC), and you have to sign a partnership agreement that outlines the terms and conditions of your partnership. You share the profits and losses of your business, and you have unlimited liability for your business debts and obligations. You also have to pay income tax and national insurance on your share of the profits.
- Limited liability partnership (LLP): This is a type of business structure that combines the features of a partnership and a limited company. You have to register your LLP with Companies House, and you have to sign an LLP agreement that outlines the terms and conditions of your LLP. You have limited liability for your business debts and obligations, and you have more flexibility and privacy than a limited company. However, you also have to file annual accounts and reports with Companies House, and you have to pay income tax and national insurance on your share of the profits.
- Limited company: This is a type of business structure that is separate from its owners, who are called shareholders. You have to register your limited company with Companies House, and you have to follow the rules and regulations of the Companies Act 2006. You have limited liability for your business debts and obligations, and you have more credibility and protection than a sole trader or a partnership. However, you also have to file annual accounts and reports with Companies House, and you have to pay corporation tax on your profits.
The most suitable business structure for you depends on various factors, such as the size, nature, and goals of your business, the level of risk and liability you are willing to take, the amount of tax you are willing to pay, and the amount of paperwork and administration you are willing to handle. You should consult a professional accountant or a business adviser before choosing a business structure, as it can have significant implications for your business.
Register Your Business
The next step to start a business in the UK as a foreigner is to register your business with the relevant authorities, depending on your business structure and location. Here are some of the common registration processes that you need to complete:
- Register with HMRC: If you are a sole trader or a partnership, you need to register with HMRC as a self-employed person, and you need to file a Self Assessment tax return every year. You also need to register for VAT if your annual turnover is more than £85,000, and you need to register for PAYE if you employ staff. You can register online or by phone, and you need to provide your personal details, your business details, and your National Insurance number.
- Register with Companies House: If you are an LLP or a limited company, you need to register with Companies House, and you need to file annual accounts and reports every year. You also need to register for corporation tax with HMRC within 3 months of starting your business.
- Register with the local authority: Depending on the type and location of your business, you may need to register with the local authority in your area, and you may need to obtain certain licences or permits to operate your business legally. For example, you may need to register for food hygiene, health and safety, environmental protection, planning permission, trading standards, or fire safety.
Open a Business Bank Account
The next step to start a business in the UK as a foreigner is to open a business bank account that allows you to manage your business finances efficiently and securely. A business bank account is different from a personal bank account, as it offers more features and benefits for your business, such as:
- Separating your personal and business finances: This helps you to keep track of your income and expenses, and to avoid mixing up your personal and business transactions. This also makes it easier for you to file your tax returns and to comply with the accounting and legal requirements of your business.
- Building your business reputation and credibility: This helps you to establish your business identity and to present a professional image to your customers, suppliers, and partners. This also helps you to access more business opportunities and to grow your business network.
- Accessing business banking services and products: This helps you to manage your cash flow and to access various business banking services and products, such as online banking, mobile banking, debit cards, credit cards, cheque books, overdrafts, loans, mortgages, insurance, and more.
To open a business bank account in the UK, you need to choose a bank that suits your needs and preferences, and you need to provide certain documents and information, such as:
- Your personal details: This includes your name, address, date of birth, nationality, and contact details.
- Your business details: This includes your business name, address, type, registration number, turnover, and tax information.
- Your identification documents: This includes your passport, driving licence, or national identity card.
- Your proof of address documents: This includes your utility bill, bank statement, or council tax bill.
- Your business plan This includes your business goals, strategies, market research, financial projections, and cash flow forecast.
If you are a foreigner who wants to start a UK company, you may find it hard to open a regular high-street business bank account without coming to the UK. However, you have other options to choose from, such as our digital business bank accounts that are easy to set up and offer all the advantages of a high-street bank account.
In order to form your UK company as a non-resident the easy way, contact us today, we will be able to form your company quickly and easily for you, ensuring correct formation and getting your company started.
Published: 1/3/2024 7:16:33 AM