Starting a business is not easy, but you can do it if you are determined enough! Read on to learn how to start a business in the UK.
This article is designed to help you understand how to start a business and make it profitable, no matter what type of business you have. This guide provides advice on how to start a business in the UK, including the different types of businesses, taxes, administrative structures and whether you need a visa.
Suppose you are starting a business in the UK that employs people. In that case, you will need to do a few things, including registering as an employer with HMRC and obtaining employer liability insurance. The laws of your country will describe the various business structures you can set up and whether you need a business licence to get started.
Legal Structures for Businesses in the United Kingdom
There are numerous business types in the UK, and you must select the one that best fits the structure of your company.
- Sole trader
- General partnership
- Limited partnership
- Limited liability partnership (LLP)
- Private Limited Company (Ltd)
- Public Limited Company (PLC)
- Unlimited company
- Social enterprise
- Unincorporated association
- Offshore company
You can become a sole trader if you want to work as a self-employed person in the UK or run your own business.
As a sole proprietor, you can keep all of your business profits. You are responsible for making your arrangements to pay income tax and National Insurance. All business debts are personally liable to you.
In the United Kingdom, freelancers are also classified as sole proprietors. To work as a freelancer in the UK, you simply need to register as self-employed and pay the appropriate amounts of tax and National Insurance.
This business type involves two or more individuals (or companies) forming a partnership and ensuring accountability equally. Profits are also split evenly, with each partner paying tax on their share and being jointly liable for debts and losses. This structure is frequently appropriate for small businesses.
Similar to general partnerships, these partnerships have at least one general partner who runs the business and is personally liable for any business debts. The partnership also has at least one limited partner, whose contribution is purely financial and for which they are only liable for the amount contributed.
Limited Liability Partnership (LLP)
This partnership agreement stipulates that neither partner is personally liable for debts that the business is unable to pay. This partnership requires a written LLP agreement and must be registered with Companies House, the UK’s company registrar.
Private Limited Company (Ltd)
This type of business is a separate legal entity from the people who run it. Limited companies are formed by registering with Companies House and must have at least one director and one shareholder. The company’s stock cannot be traded publicly.
Public Limited Company (PLC)
PLCs differ from limited companies in that their shares can be publicly traded. You must have a minimum share capital of £50,000, with at least 25% paid in advance of the start-up.
This business structure is uncommon in the United Kingdom. It entails shareholders having unlimited joint liability for business debts, which means they can be covered with personal assets if the business assets fail to meet debts.
If you want to work for yourself or start a business in the UK as a foreigner, you must first complete the following steps:
Check That You Can Legally Start a Business
Verify that you are legally permitted to start a business. You must ensure that your immigration status allows you to open a business. For non-EU/EFTA nationals, this may imply obtaining the necessary visa and residence permit.
Make a Business Plan
Entrepreneurs in the United Kingdom require a business plan. This will assist you in determining whether your business ideas are likely to be successful and sustainable. You’ll need to conduct market research and create budget projections. The business plan and cash flow forecast templates are available for download from the UK government website.
Decide on Your Structure
As above, you’ll need to choose the business structure that best represents your enterprise.
Choose a Business Name and Address
You can simply use your own name if you’re a sole proprietor. You will require an address to register your UK business for tax purposes and join the company register. Only a few companies must register their names, but others can register as a trademark to prevent others from trading under the name. You must appoint directors and a company secretary, determine your shares and shareholders, write your memorandum and articles of association, open a separate bank account, and register for corporation tax when forming a limited company.
Register with HM Revenue and Customs
You must register your UK business with HMRC for tax purposes. Limited companies must register with Companies House for a fee of £12 (online) or £40 (by post) (by mail).
Check any additional rules for your type of business:
There may be additional requirements depending on the nature of your UK business, such as:
- Permits and licences (e.g., for selling food, playing music, or trading in the street)
- Rules to follow if you buy or sell goods in another country or store personal information there.
You can get help and support for your UK business from several schemes specialising in different areas, including help with finances, taxation, and business planning. UK business startup costs vary depending on several factors, but there are various support sources in UK business grants and loans. Here at Vakilsearch, we will help you pace the entire process appropriately and in a hassle-free manner.