Introduction:StartingBusinessintheUKAsaForeigner
Entrepreneurship is encouraged and promoted in the United Kingdom Though the legal framework to start a UK business as a foreigner is pretty much streamlined, you can still face challenges if you fail to understand what is required of you
In this blog we will go over everything you need to know about starting business in UK as foreigner including the various types of company structures, taxation, administration, and the various visas you can apply for
WhatarethedifferenttypesofbusinessesintheUK?
There are several business types in the UK, and you must choose the one that best fits your companys structure You can choose from the following:
Being a sole proprietor
Having a Partnership firm
Having a Limited Liability Partnership firm – which is also known as LLP
Having a Private Limited firm
The legal business structure you select will affect many aspects of your company, including taxation, personal liability, and the amount of administrative work you must perform
SoleProprietor
profits after you’ve paid your taxes You are personally liable for any losses your company suffers When it comes to running and naming your company, you must adhere to certain rules As a sole proprietor, you have the following duties and responsibilities:
1 Keep track of your income and expenses
2 Every year, file a self-assessment tax return
3 Pay your income tax
4 Pay for national insurance classes 2 and 4 – Value Added Tax (VAT)
You must register for VAT if your business meets the threshold –
Choosing a Company Name
You can either trade under your own name or use a different name for your business If you want to prevent others from trading under your company name, you must register it as a trademark
PartnershipFirm
A partnership firm is the most straightforward way to set up a company in the UK as a foreigner for two or more people who would like to run a business together The duties of a partnership business structure are similar to those of a sole proprietor with the exception that you have one or more business partners When you form a partnership firm, you must have a formal agreement outlining the agreed-upon split of earnings, losses, liabilities, and ownership
When forming a business partnership, you must:
1 Select a name
1
name
2 Select a nominated partner – the ‘nominated partner’ is responsible for the partnership’s tax returns and financial management
3 Become a member of HM Revenue and Customs (HMRC)
LimitedLiabilityPartnership(LLP)
A Limited Liability Partnership can be formed to conduct business with two or more members (LLP) A member can be an individual or a company (referred to as a “corporate member”
As in a regular business partnership, each member pays tax on their share of the profits, but is not personally liable for any obligations that the business is unable to pay The following are the first steps in forming an LLP:
1 Choosing a Business Name
2 Possessing a registered address
3 Having at least two members
4 Having a written agreement outlining how the LLP will be run
5 Members Duties and Responsibilities After Registering the LLP with Companies House
6 You must always have at least two “designated members” who have more responsibilities than other members
In some cases your company may be registered as one of the structures listed above but operate in a different sub-category, such as:
1 A franchise – is a company that already exists and has a good reputation If you own a franchise, you own the rights to use the established companys business plan and operate under their brand
2 A freelancer – is someone who uses their skills and experience to provide a service (such as writing or photography) This type of self-employment works by acquiring clients for whom you will perform services
3 A social enterprise – is a business that works to help society or the environment in some way To ensure that they continue to work towards societal or environmental goals, these businesses must be open about the profits they reinvest
4 A charity firm – is a charity’s goal like that of a social enterprise is to serve the greater good of society It is, however, unique in that all of its profits come from donations
Each company has its own set of rules and criteria You may want to seek a professional’s legal advice before proceeding
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PrivateLimitedFirm
A Private Limited business must be administered by an appointed Director in addition to any shareholders
The finances of a limited company are separate from your personal finances as the founder If you are the companys sole employee, you can still register as a limited company by naming yourself as the Director
The following are some of the Directors responsibilities:
1 Follow the guidelines outlined in the companys articles of incorporation
2 Maintain a record of the companys activities and report any changes
3 Accounts and corporate tax returns must be filed
4 Corporation Tax must be paid
Although employees can be hired, a Director is still legally responsible for the company’s records, accounts, and performance
Because it is a separate legal entity the company has its own bank account and is subject to corporate tax Corporation tax can be registered at the same time as your business is registered with Companies House, but unlike income tax, all profits made by a business are taxed, so there is no tax-free exemption In contrast, the government allows for expenses and deductions that may reduce the amount of corporate tax owed
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WhatarethestepsyoumustfollowtostartbusinessintheUKasaforeigner?
Determineyourlegalstanding
This means any EU citizens who lived in the UK before January 1st 2021 may be eligible for the EU Settlement Scheme, but most of the applicants will need to apply for a UK business visa before starting business in the UK as a foreigner
Filloutavisaapplication
If you need a visa, you should apply for one ahead of time The UK offers various visas that cater to different businesses You must only apply for the visa that aptly suits your business type and purpose
Entrepreneurs must have a business plan before starting business in the UK as a foreigner This also includes basic market research that will help you determine whether your business concepts are likely to thrive and be long-term viable in the UK
Determineyourbusinessstructure
Before starting business in the UK as a foreigner, you must decide the best-suitable business structure for your company
Chooseacompanynameandaddress
If you are a sole proprietor you may use your own name You will need an address when registering your UK business for tax purposes and entering the company register
Only a few businesses are required to register their names; however, you may do so as a trademark to prevent others from trading under the same name as your business
If you are forming a Private Limited Company, you must appoint Directors and a Company Secretary, calculate your shares and shareholders write your memorandum and articles of organization open a separate bank account, and register for corporation tax
BecomeamemberofHMRevenueandCustoms–alsoknownasHMRC
You must register your UK business with HMRC for tax purposes Private Limited companies must also register with Companies House
Checkanyadditionalrulesthatapplytoyourindustry
Depending on the nature of your UK business, additional requirements such as permits or licences may apply
HowcanyouestablishaforeigncompanybranchintheUK?
Companies House requires foreign companies that are eager to do business or establish a branch in the UK to register as an overseas company
If you own a company in another country and want to open a branch in the UK, you must complete and submit form OS IN01 to Companies House The registration fee is £20
Important Note:
Except for sole traders and partnership firms, many businesses in the UK require a separate UK business bank account However, its a good idea to open a separate bank account to keep accounting operations simple
WhatarethedifferenttypesofUKBusinessVisas?
Below-mentioned are the various categories of UK Business Visas for starting a business in the UK as a nonresident However you must consult a UK Business Visa Solicitor or Lawyer to understand which category suits you the best!
Different Business visa UK from India and its types explained by our business consultant in India
UKExpansionWorkerVisa
A UK Expansion Worker Visa allows you to enter the UK and open a branch or subsidiary firm of your existing overseas business
This is the most popular business visa category, as it requires ZERO Investment and is a selfsponsored route
This visa was launched just last year, in April 2022, as a replacement for the UK Sole Representative Visa
You are also permitted to bring your partner and children (under the age of 18 years) to the UK with this visa
Know Everything About UK Expansion Worker Visa
UKInnovatorVisa
The UK Innovator Visa is suitable for those entrepreneurs who have an Innovative, Viable, and Scalable business plan
Along with this, you are required to have experience in doing business in that industry
In order to apply for a UK Innovator Visa – you must first get an endorsement from a UK-government authorised endorsing body
It is also mandatory for you to have £50,000 as investment funds
You are permitted to bring your partner and children (under the age of 18 years) to the UK with this visa
Know Everything About UK Innovator Visa
UKStart-upVisa
To qualify for a UK Start-up Visa – you DO NOT require any investment funds or any prior business experience
However, you must have a business plan that is Innovative, Viable, and Scalable
And you must also get an endorsement from a UK government authorised endorsing body
You are permitted to bring your partner and children (under the age of 18 years) to the UK with this visa
Know Everything About UK Start-up Visa
A Skilled Worker Visa holder must always be employed by a UK Sponsor Licence holder in order to keep their status
However, a Skilled Worker also includes CEO, Managing Director, Director, and other owner manager roles
You are permitted to bring your partner and children (under the age of 18 years) to the UK with this visa
Know Everything About UK Skilled Worker Visa
WhatistheUKTaxationforbusinesses?
For tax purposes, all UK businesses and entrepreneurs must register with HMRC and file their tax returns
Profits earned by self-employed sole proprietors and partnerships are subject to taxation
Private Limited companies and foreign corporations with UK branches must register for Corporation Tax Corporation Tax is levied at 25% of company profits
You must also register for VAT if your business is eligible for it
Please Note:
You still must apply for a UK Business Visa for starting a business in the UK as a EU citizen There are also multiple investment opportunities in the UK for foreigners in various industries and sectors
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DoyouneedhelpinstartingabusinessintheUK?
There are ample business opportunities in the UK for foreigners make sure you follow our quick and comprehensive guide to starting business in the UK as a foreigner in 2023
Our UK-qualified solicitors and lawyers will ensure a successful UK business registration for foreign nationals and also UK business visas for foreign nationals Our UK Visa Expert is based in India – Mumbai | Delhi | Bengaluru and offers legal advice on all matters concerning setting up a business in the UK as a foreigner
If you want further assistance to start a business in the UK as a foreign national We Are Just A Call Away!
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AbouttheAuthor:TheSmartMove2UK
The SmartMove2UK (a unit of SmartMove Immigration) is a niche firm of UK Immigration law in India with branches in Mumbai | Delhi | Gurgaon | Chandigarh | Vadodara | Bangalore led by a specialist Solicitor Evolving from practicing exclusively in the areas of UK nationality and immigration law Our expertise now encompasses a wider global mix including immigration laws of Australia, New Zealand, USA, Malta, Portugal (Golden Visa), Dominica, St Kitts & Nevis, India and Canada With more than a decade of Experience providing immigration and nationality services, we offer clients a personal and friendly, yet comprehensive solution to their immigration, travel and business needs
