Starting a business in the UK offers a significant opportunity for non-UK residents due to its favourable business climate, vibrant legal system, and easy company formation. A step-by-step guide is provided for those considering opening a UK company without living in the British Isles.
1. Different Structures of Businesses
In the UK, choosing the right business entity is crucial. The main types are:
- Private Limited Company (Ltd): Most common amongst non-residents due to its ease of maintenance and liability not extending past the company being separate from shareholders.
- Public Limited Company (PLC): Ideal for businesses aiming to raise funds from public investors by selling shares on the stock exchange.
- Limited Liability Partnership (LLP): Similar to a corporation, LLPs have limited liability for partners, and due to their complexity, they are less preferable to non-residents than LLPs.
2. Assign a UK Resident Director
Companies must have at least one UK-based director, independent or corporate, and appoint one for non-UK residents. Failure to do so may result in fees from a company formation agent.
3. Register Your Company Address
A UK registered office address is required for official letters, and it must be a physical location, not a PO box. Many UK business owners use professional services to provide this address and comply with UK rules, ensuring compliance with local regulations.
4. Prepare Documents from Various Sources
You must prepare certain primary documents to register your company in the UK.
Create a Memorandum of Association. This is an essential, legalised agreement signed by the initial shareholders to form a company. It is followed by the Articles of Association, which state internal management rules such as decision-making or director and shareholder roles.
Form IN01 is crucial for forming a company in the UK, detailing its structure, directors, and shareholders. If you need UK company law experience, consult a local solicitor or bank manager for compliance guidance or a specialist company formation for non UK residents.
5. Register with Companies House
Companies House is the official register of companies in the UK. You need to send your completed form IN01 and the memorandum and articles of association to the company’s house. This can be completed online or in writing.
This registration is usually completed within 24 hours online and up to eight days when dealing with posts. Companies House will, when fully approved, issue you a Certificate of Incorporation, which is evidence that your company has been legally formed.
6. Get A UK Business Bank Account
Opening a UK business bank account is crucial for managing company finances and transactions, but non-residents may need help with in-person requirements. Some banks offer international services and online banking solutions.
7. Register for Taxes
Having registered your company, complying with the UK tax rules will become necessary.
The refund is only available within 30 days of HMRC notifying the company of its start of trading for corporation tax purposes. This is a mandatory duty for UK-based companies and should be obtained through HMRC. Proper registration is crucial to avoid fines.
To comply with The Value Added Tax Act 1994, companies with a taxable turnover of £85,000 or more must register for VAT under the £85,000 threshold, and if employees are involved, a Pay As You Earn (PAYE) system must be installed.
8. Stay Within Legal and Regulatory Boundaries
Your company must do a number of important things to comply with UK legal and regulatory obligations.
A company must submit a balance sheet and annual confirmation statement to companies before incurring fines and adhere to specific laws like health and safety regulations for safe working conditions.
Failure to comply could result in fines or severe penalties, making maintaining a good company standing crucial.
9. Ask difficult questions and Consider Legal And Professional Advice
Consulting with a lawyer or accountant can help address legal and financial issues related to forming a company in the UK. An agent or solicitor specialising in UK company law can guide you through the necessary steps, while an accountant can assist with tax planning and compliance.
10. Browse Business Support Services
The UK is full of great support services for any new business.
Business incubators and accelerators provide startups valuable resources like mentorship, government grants, financial aid, industry associations, and professional networks. These resources enhance the chances of success and equip startups with the necessary tools and ties to survive in the UK market.
Conclusion
Starting a non-resident company in the UK is profitable due to low-profit tax rates. The process is straightforward, with proper planning and professional assistance. By understanding the benefits and utilising professional help, businesses can register easily, maximising prospects in the UK market.