-
By miguel-ingles
- In Uncategorized
It is not a secret that many entrepreneurs look to establish a business in the UK. This is, mainly, because of advantageous fiscal rules. In the next few lines, I will explain how to set up a company in the UK as a foreigner.
Why Setting Up a Company in the UK as a Foreigner
Firstly, in addition to being one of the largest world economies, forming a corporation in the UK may serve as an entry door to access other large global markets, such as American or European.
Secondly, creating a company in this country is much more agile and less paperwork is required than in other nations, specially when comparing it with some EU states.
At last, its fiscal rules are more relaxed than in neighbouring countries.
Choosing the most Appropriate Business Structure for your Company
This should be the first step in the formation process of a company. Your choice will vary depending on its economic activity, the number of hired employees, whether you want the personal assets of each partner to be protected, among other factors. These are some of the most common business structures:
- Sole trader: the owner manages the assets and the business operations of the company. However, they are also in charge of the payment of debts (full liability).
- Partnership: similar to sole traders, although profits and debts are divided between multiple partners.
- Limited Company (Ltd.): the most extended business structure in the UK. Because it is a separate entity to their owners, liability will be limited to whatever each partner invested into the company.
- Limited Liability Partnership (LLT): it offers partnership’s operational flexibility. At the same time, liability stays limited.
Next Steps to Set Up a Company in the UK as a foreigner
Depending on the business structure you have chosen for your corporation, the next steps for the formation of the company will vary.
Shared steps
Firstly, you must choose a name for the company. It must be unique and comply with certain rules.
On the other side, you must keep track of the business’ income and expenditures. If the revenue is superior to 90 000 GBP, you will have to sign up for VAT.
Finally, you must open a commercial bank account in the UK. This will grant you multiple advantages. I will cover these, alongside the opening process later on the article.
Sole Trader
Apart from following the previous steps, the only specific process you must do is to apply for a National Insurance Number.
Partnership
You must appoint a “nominated partner”. They will send the annual tax return. Moreover, the company must be registered in the HMRC.
Each partner will send their own tax return individually.
Limited Company
Firstly, you must appoint a director or a legal representative. Also, the company must establish its registered office in the UK. After this, you should write the Memorandum of Association and the Articles of Association. More information about them in this article.
Finally, the partners have to register the company in the Companies House and also in HMRC to pay the Corporation Tax.
Limited Liability Partnership
You should follow the previous steps to set up a limited company. In addition, the business will appoint two “designated members”, that will have more responsibilities, such as the control of the business’ finances.
How to Open a Commercial Bank Account in the UK as a Foreigner
This is an essential process, regardless of the business structure you choose. This way, by separating personal and company’s economy, you will get more clarity about the corporation’s financial health.
Additionally, having a British bank account will allow the company to ask for credit and funding to local entities and will also make the tax return a more agile process.
The steps to follow to open a commercial bank account are:
- Look for the services that the banks which are present in the UK offer (Barclays, HSBC, etc.) and send a request to the entity that grants the most favourable conditions for your company.
- Provide the requested documentation. This usually consists of an I.D. Card, a contact phone, your personal and the business’ registered office address, an estimation of income and expenditure and the Companies House registration number.
- Payment of fees.
- Finally, you will receive the bank account’s number.
Take into account that these steps and requisites may vary between bank entities or business structures. For examples, sole traders must provide their National Insurance Number because they cannot register in the Companies House.