How to register a new business in the UK? A comprehensive guide
Whether your business structure is sole trading, partnership, or company, registering with either Companies House for incorporation or the HMRC to pay tax is important. Even if your business is not physically present in the UK, you can still register it in the UK to be able to transact business in the UK. This comprehensive guide will help you to understand how you can register each company structure in the UK and what is needed.
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Why register a new business in the UK?
There are several advantages that you and your business stand to gain when you register to do business in the UK.
Some of those advantages are listed below.
- Enjoy a large and diverse workforce
The UK population has a diverse workforce that can be useful for your business if it is sited in the UK. You can get any level of experience of workers to work for your company.
- There is an ease of doing business in the UK
The laws that guide businesses in the UK are not too stringent and thus make it easy to conduct business with maximal profits. Depending on the profits made by the company, you can pay as low as 20% in tax. There are also a lot of tax exemptions for companies and businesses by which you can reduce the taxes you pay. There are also personal allowances for you as the company owner, shareholder, or member.
- Take advantage of prestigious virtual office addresses
If your business is not physically located in the UK, you can still register it to conduct business in the country. Making use of virtual office addresses in prestigious locations around London or any other business hotspots in the UK.
The virtual office address providers are tasked with handling all your official mail and forwarding the important ones to the director’s address which can be located within or outside the UK. In cases where you need additional services like physical office space for occasional meetings, video conferencing services, dedicated email and website domain, dedicated secretary, etc., you can also request those with additional charges.
- Have access to free business advice, grants, and tax benefits from the government
When your business is registered in the UK, the government gives tax benefits to certain businesses that you may be eligible for, especially startups. If you do not have the required knowledge to understand how those work, you can simply hire a tax accountant on a contract or permanent basis. Also, the government offers free business advice to businesses as well as grants to startups or as palliative measures whenever there is an economic crisis.
- Enjoy a stable business economy
The UK economy is still one of the most stable in the world now, even with Brexit. What that implies is that you do not have to fear encountering economic fluctuations that could affect the profitability of your business.
- Competitive Start-up visa for entrepreneurs
The UK government also provides startup visas for entrepreneurs and the Innovator visa for people who have innovative business ideas and who are willing to set up businesses in the UK. While the Innovator visa requires that you have up to £50,000 to invest in such an innovative business, the Startup visa only requires that the business idea you have is endorsed by an approved agency of the UK government. With that, you can obtain the visas and set up your business in the UK to have access to the prestigious and professional image that the country has to offer your business.
Costs of registering a new business in the UK
You can register your new company for as low as £12 when you do the registration by yourself and online. If you choose to register by post, it costs £40, and fast-tracking the registration for some business structures can cost you up to £100. Using third-party software for registration, however, can cost you more depending on the software.
How to register a new foreign business in the UK
1. Choose a company structure
This is the first step to registering a business in any country though. This will give you a guide as to which company agency you must register with and when. The company structures acceptable in the UK are sole trader; partnerships – general, limited, and limited liability; limited companies – limited by guarantees or shares, private or public; charities; cooperative societies; clubs; educational or religious institutions; etc.
For the sole trader and general partnership, registration is only done with the HMRC using Self-Assessment for tax payment. Charities are to be registered with the Companies House, the Charity Commission, and sometimes with the HMRC if they are to pay tax. All other structures must first register with the Companies House for incorporation and the HMRC to pay corporation tax, VAT, and or Self-Assessment as the case may be.
2. Search and choose a SIC code
The SIC code is the Standard Industrial Code which is internationally provided by the SIC organization. However, it is available on the Companies House website at www.gov.uk. Each business type has a specific code attached to it. For some business structures, you can choose more than one SIC code while you can only choose one for others. The directives as to what applies to which structure, as regards SIC code, are available on the Companies House website too.
3. Choose a unique company name
There are rules guiding the choice of a business or company name. Now, you may choose not the register your company name when you are setting up a business as a sole trader or partnership. But if you intend to keep the name of your company alone, you must register it as a trademark.
The following rules are to be strictly adhered to when choosing a company name:
- It must be unique; never existed before in the UK marketplace.
- Must not be similar, like, or the same as any existing company name in the UK.
- Must not be offensive
- Some words cannot be used in a company name unless you have taken permission from the right organization. The information as regards these words and the respective organizations to take permission from can be found here.
4. Obtain a registered office address (virtual or real)
An office address to be used for registering a company with the government must be located in the UK, precisely in the jurisdiction where you are registering your business. So, if your office address is located in England and Wales, you cannot register the business in Scotland or Northern Ireland unless you get an address in those jurisdictions first. It is important to mention here that if you have chosen to use your home address as your registered office address, the address then becomes public knowledge and can be accessed by anybody who goes looking for it on the Companies House register.
As mentioned earlier in this article, you can choose to have your business physically present in the UK or not. If your business is going to have a physical location, say in London for example, choosing a prestigious location like Wharf Street will give your business a professional outlook. However, if the cost of obtaining a physical office address is too high for your business at the moment, you can opt for a virtual office address while you transact business from your home.
Virtual office addresses are physical office spaces located strategically for different types of businesses. Depending on your type of business, you have the option of choosing from a list of virtual addresses available from your service provider of choice at a ridiculously lower price than renting the physical office space personally.
With a virtual office, you get to reduce your overhead costs because your staff can work from anywhere in the world, have access to meeting and conference rooms for your occasional meetings, a dedicated local telephone number, a dedicated secretary or receptionist for your business, email and website domain names, etc.
5. Draft the company’s LLP agreement or memorandum and articles of association as the case may be.
The LLP agreement is the agreement reached by the partners in an LLP while the memorandum and articles of association are the agreements reached by the limited companies. These documents are guidelines and rules by which the companies are established and managed. These must be submitted to the Companies House when incorporating the business and any changes to it along the line must be equally updated on the Companies House website accordingly.
6. Choose company directors, partners, shareholders, guarantors, secretaries, members, etc. as applicable to the company structure you want.
For the sole trader and general partnership, it is not required to choose any of the above positions before starting your business as they have no function in the business anyway. However, for the other business structures, you must choose each of these people as applicable including their respective biodata to be used for registration. The information of each person you need to obtain is listed below –
- Name and address (the director’s address does not have to be a UK address),
- Dates of birth,
- National Insurance numbers,
- A copy of their government-issued ID.
7. Open a dedicated business bank account
For ease of tax filing, it is important that you have a separate bank account number for your business even if you are a sole trader. Using a personal bank account number for your business makes tax filing more difficult and you could unwittingly pay more tax than you are liable for. Other company structures, however, especially the limited liability companies must compulsorily have company accounts because they must file annuals account with the Companies House yearly.
8. Register your company
Company registration can be done by yourself online via the HMRC or Companies House website as applicable. Alternatively, you can download the form, fill, and send it to the address written on it by post. You can also use third-party software or an agent for registration at an extra cost.
Registration for Self-Assessment is free while company incorporation with the Companies House costs £12 online and £40 by post. If you want the registration done the same day, it could cost you up to £100.
9. Keep HMRC and the Companies House updated on the developments in your company as applicable.
The sole trader and general partnership do not need to keep the Companies House updated but they must keep their tax filing updated with the HMRC. Other company structures must file annual accounts and confirmatory statements with the Companies House annually and they must also keep their tax filing updated with the HMRC.
The ease of doing business in the UK is one of the unique features of the country and why it ranks fourth on the list of the best economies for entrepreneurs and startups. If you follow the steps listed in this article, you are sure to get your business up and running in no time with maximum profits to boot.
How to register a trademark in the UK?
1. Choose the unique item you want to trademark
Make sure it is not the same as, like, or similar to any existing trademark. Also, ensure that it is not offensive
A team of experts will get you the answers you need to get started with your business.Start now