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By antonio-ingles
- In Uncategorized
The United Kingdom can be a great place to start your own business, thanks to its stable economy and favourable business policies, which are a great support for any entrepreneur.
To do so, it is essential to follow a series of steps, as shown below, to ensure you meet all legal and tax requirements so you may successfully establish your own business in the United Kingdom.
1. Types of business in the United Kingdom
In the United Kingdom, you have several options to choose from: Sole Trader, Limited Company or Partnership. Each one has its own advantages and disadvantages, so you will have to determine which is the more suitable for you.
Advantages and disadvantages
1. Sole Trader: You are the sole owner, meaning you have full authority over all business decisions, but you also bear full responsibility you’re your debts and expenses.
2. Limited Company: Liability is shared among multiple owners or investors based on their respective investments, but their individual authority is also more limited.
3. Partnership: There are multiple owners with shared responsibility and authority, along with the capacity of managing investments and profit distribution. However, they are not as well protected against debts.
2. Register your business in the United Kingdom
Once you decide the type of business you want, it is time to choose a name. Make sure the name you choose is not registered already by checking this link in the Companies House website, the entity responsible of businesses registration in the United Kingdom.
Once you have decided the name of your business and checked out that it is not in use, you can proceed with the registration.
It is a simple process that can be done online through the Companies House website by using this link, especially if it is a Limited Company.
You will have to provide the relevant information, such as the name of the business, registered address and details about the company directors.
However, if you opt for the Sole Trader option, registration with Companies House will not be necessary, but you will have to inform HM Revenue & Customs about your business activity.
3. Open a business bank account
This step is crucial, as it will not only simplify the financial management of your business but also help you comply with tax obligations, ensuring that business expenses and income are both clearly recorded.
4. Fulfil your tax obligations
Once your business is registered, you must comply with the relevant tax obligations.
For example, if you have a Limited Company, you will need to pay Corporation Tax on your business profits. But if you are a Sole Trader, you must report your earnings in your personal tax return.
Additionally, if you have employees, you must make the necessary National Insurance contributions for both them and yourself.
It is advisable to keep a detailed record for your business income and expenses, to facilitate tax reporting and avoid issues with the authorities.
5. Obtain the necessary licenses and permits for your business in the United Kingdom
Depending on the type of business you choose, you may require specific licenses or permits. For example, if you sell food or alcoholic beverages, you must obtain the needed permits.
You can check which type of license you need through this link or contact the relevant local authority so they provide you with the necessary information.
6. If needed, hire staff
If your business has other employees –apart from yourself- you must strictly comply with United Kingdom labour laws.
This includes registering them with HMRC, ensuring they receive a fair wage and adhering to workplace safety regulations.
7. Advertise your business in the United Kingdom
Once your business is up and running, it is time for a very crucial step: attract customers. For this, having a well-thought-out marketing strategy is essential.
And since we live in a digital era, it is key to create a website for your business and establish a presence on social media platforms such as Instagram, LinkedIn, Facebook, etc.
Attending trade fairs can also be a great way to attract customers, as it allows you to showcase your products or services to a wide arrange of potential clients.
8. Keep your records updated and meet your annual obligations
It is of great importance to keep your business records up to date.
You must submit annual reports and accounts to Companies House and also file your tax returns with HMRC.
Any modifications, like a change in company leadership, shareholder movements, or license renewals, must be recorded.
All of this is decisive to ensure compliance with regulations and maintain a clear understanding of your business’s status.