The UK is one of the world’s leading investment destinations for companies relocating and developing their global business. Despite the obvious appeal, companies entering the UK market can expect to face complicated red tape. Let’s look at some challenges you’re going to have to navigate.
This article was originally published on BusinessTech
How to start a business in the UK
You have a great idea and the money and motivation to get started. However, there are legal and registration requirements to navigate before getting your SME off the ground. Regulations should help create the best possible conditions for businesses to grow and succeed, but often they seem to do the opposite.
Bureaucracy and excessive regulation are common burdens small and medium-sized enterprises (SMEs) face. Many businesses feel that they are prevented from growth and productivity due to heavy legislation.
If you work with an experienced business relocation service, you can get set up and have a company completely incorporated with the necessary directors and shareholders in as little as five days.
What you need to do in order to set up your business in the UK depends on your business model, where you work and whether you are going to take on employees to help you.
1. What's your immigration status?
Before starting your business, you'll need to make sure you are legally allowed to live and work in the UK – you'll need to secure the correct visa and residence permit.
If you are planning to come and start a business in the UK or pursue a business idea, you can look at applying for a Tier 1 investor or business development visa:
Innovator visa: If you have at least £50,000 in investment funds and want to set up a business in the UK, you can stay in the UK for up to three years and four months.
Start-up visa: You'll need to be endorsed by a UK higher education institution or a business organisation that supports UK entrepreneurs. This allows you to stay in the UK for two years and pursue your business idea.
Tier 1 (Investor) visa: This visa is a relatively easy if somewhat expensive route to the UK. It requires investing a large amount of capital into the UK.
2. Registering your business
Most businesses or business owners set up as a sole trader, limited company or partnership.
When you establish your business, these are some of the documents you will need:
Certificate of incorporation
This document includes all your company's most important information, including the name, company registration number and the date on which the company was incorporated.
Memorandum of association (MOA)
The MOA is a document that confirms that the subscribers wish to form a company under the Companies Act and agree to become the first members/shareholders of the company.
Articles of association (AOA)
The AOA sets out how the company is run, governed and owned.
When choosing a name for your company, the name cannot be the same as another registered company's name. If it's too similar to another company's name or trademark you may have to change it if someone makes a complaint. Your name should typically end in either “Limited” or “ltd” and your company name cannot be offensive or contain what might be considered a “sensitive” word or expression. Nor can it suggest a connection with government or local authorities unless you get permission.
3. Requirement of a company representative in the UK
The UK does not require a director or shareholders to be present in the country.
In these situations, a third-party representative often steps in to act as a company secretary. This can be arranged as part of a business relocation service package.
4. Establishment of an overseas entity
An overseas company carrying out business in the UK does not have to register with Companies House. Registration of an overseas company is only necessary when it has some degree of physical presence in the UK. This could mean a physical address in the country where business is carried out.
Although this is true, don't let not having a physical address in the country stop you from incorporating a business in the UK. Speak to one of our expert consultants if this is your situation.
5. Apply for a trademark
You can register your trademark to protect your brand. This could be the name of your product or service for example.
The filing process
Apply to register your trademark in the UK. You can start the application process on the gov.uk website. We recommend that you get legal guidance throughout this process to ensure you're doing it the right way and avoid issues later on.
Once you have filed the necessary paperwork, your trademark and your business will be examined by the Intellectual Property Office (IPO) to determine whether it can be registered. If accepted to be registered, your trademark will be shown in the IPOs Trade Marks Journal.
For three months, the public will have an opportunity to oppose your trademark. If there are no oppositions to your application, a trademark can be registered.
6. Intellectual property law
When you're opening a business, you will need to think about intellectual property (IP) law. IP is a form of original creation that can be bought and sold. IP law is used to protect ideas or businesses by granting the owners certain exclusive rights to various intangible assets such as brands, designs, songs or intellectual creation.
The UK Intellectual Property Office (IPO) states that there are four principle types of IP: patents, trademarks, designs and copyright.
You cannot assume your idea is 100% unique. Just because you haven't seen it in a store does not mean it hasn't been patented by someone before you.
Copyright protection is different to other forms of IP because you don't need to register to get it, pay any fees or complete any forms. Copyright protection automatically exists as soon as you create your work. It can even be applied to a shopping list or note.
7. Privacy and Electronic Communications Regulations (PECR)
When speaking about software licensing and how you conduct your digital marketing, it's important to stay on the right side of the law.
Key elements of the regulations are that you need to get consent before installing cookies on a user's machine and have the reader's individual consent to be able to send electronic marketing. If an individual has opted out of receiving marketing information, you are not allowed to send it.
To comply with these regulations, you must:
- Ensure that you have the customer's consent to electronically market to them by phone or email
- Identify yourself when you carry out marketing
- Provide appropriate contact details when sending marketing material or messages (this should be a postal address, email address or phone number)
One potential challenge can be obtaining a UK bank account – banks are generally quite difficult to deal with in the UK. It can take three to nine months to get your UK bank account if you do not have someone on the ground there because of the banks' compliance regulations.
Sable International has a relationship with one of the banks in the UK which allows us to set up the account on behalf of a company. The account will be in the company's name, but it will sit under Sable's banking platform. We can set up an account within about two weeks. Doing it this way allows you to get your company up and running quickly while we assist you in applying for your company's own bank account.
9. Taxes and accounting when starting your business
If your SME falls under any of the below categories, you must register and pay Corporation Tax on your business profits:
- Limited company
- Foreign company with a UK branch or office
- A club, co-operative or other unincorporated association (a community group or sports club)
Your Corporation Unique Taxpayer Reference (UTR) number is generally created by HMRC once the company has been incorporated at Companies House. This number will be sent to the company's registered office.
If you are looking to employ staff, then the company will need to complete a PAYE application and file it at HMRC to become an employer.
10. When do you need to register for VAT?
In the UK, a business must register for VAT if its taxable turnover for any consecutive 12-month period exceeds the VAT registration threshold. The existing VAT registration threshold is £85,000. According to current government policy, this threshold will stay at £85,000 for two years from 1 April 2020.
What hurdles have you encountered when pursuing your business in the UK and how did you overcome them? Let us know in the comments.
If you need assistance setting up and managing your new business operations in the UK speak to one of our accountants on email@example.com or call +44 (0) 20 7759 7553.
We are a professional services company that specialises in cross-border financial and immigration advice and solutions.
Our teams in the UK, South Africa and Australia can ensure that when you decide to move overseas, invest offshore or expand your business internationally, you'll do so with the backing of experienced local experts.