Starting a business in the UK is a great choice for entrepreneurs. It offers a strong economy, a competitive environment, and an easy process to establish your business. Additionally, the UK provides various tax and administrative benefits, making it a popular destination for setting up a business.
Here’s a step-by-step guide on setting up your business in the UK, including the required documents, the registration process, and key tax considerations to keep in mind for a successful start.
Requirements to start a business in the UK
1. Choose the right business structure
Before registration, choose the structure that fits your business model. This may affect legal obligations. Here’s a breakdown of the main business structures:
- Sole trader: A sole trader is a business owned and operated by one individual. It’s the simplest and most affordable option. As a result, you make all the business decisions and you’re responsible for all business debts and liabilities.
- Limited liability company (Ltd): a limited business is a private company, so it is legally separate from the people who own it. However, a director must be appointed for the company, along with at least one shareholder.
- Partnership: In a partnership, the business is run by two or more people, known as partners. Each partner is liable for their own share of any company losses, as well as their share of the profits. Likewise, partners are responsible for managing their own tax obligations.
- Limited Liability Partnership (LLP): this business structure is similar to a limited company. Partners have limited liability, but it offers flexibility in organizing the internal structure. It’s popular in law firms and consulting companies.
Most entrepreneurs start as a sole trader or limited company. Thus, carefully consider which structure best suits your type of business, and keep in mind that the process of setting up the company may vary depending on the legal structure you choose.
2. Register your business with Companies House
Companies House is the official register for businesses in the United Kingdom. All companies, except sole traders, must go through this process.
It’s a straightforward process and can be completed online. The business structure you opt for will dictate the documents you must submit. Therefore, it’s important to understand the requirements before beginning the process. For a Limited Company, some of the requirements include:
- Name of the company
- Registered address
- Details of directors and shareholders
- Description of the business activities
- Submission of the Memorandum and Articles of Association
Online registration costs £12, and the process takes about 24 hours.
3. Register with HM Revenue and Customs (HMRC)
All companies and entrepreneurs must register with HM Revenue and Customs (HMRC) for tax purposes in the UK. You can complete this process online, by telephone or by mail. It ensures that you comply with tax laws and pay applicable taxes, such as corporation tax or VAT.
4. Open a business bank account in the UK
If you own shares or start a business in the UK, you must have a bank account in the country. It’s highly recommended to have a business bank account in order to manage expenses and profits, as well as to pay taxes. Additionally, banks may offer certain benefits for these types of accounts.
Banks may require some of the following documents to open a business bank account:
- ID document
- Utility bill (e.g., electricity, gas, or other services)
- Lease or mortgage agreement
- Business address
- Company registration document
Although it’s possible to open a bank account without being a resident, since Brexit, some banks have become more rigorous with their requirements.
5. Meet your tax obligations as a business owner
When you start a business in the UK, it’s crucial to ensure you meet all legal and tax requirements. This is essential to avoid penalties. For this reason, most businesses hire accounting and advisory services to help meet their needs and ensure compliance with regulations.
6. How to succeed with your business
While it can be tough to stand out in a competitive market, here are a few tips to help your business succeed:
- Choose a unique and memorable name
- Benefit from government support programs
- Establish a presence on digital platforms and social media to boost your visibility
- Follow regulations to avoid legal and tax issues
Key steps to successfully start a business in the United Kingdom
Starting a business in the UK the right way is crucial for your company’s success. However, it’s important to follow the proper steps and meet all legal requirements. With the right business structure and sound financial planning, you can establish and grow your business in the UK, even though it’s one of the most competitive markets in Europe.
Therefore, if you’ve decided to start a business, don’t let the paperwork hold you back and reach out accounting experts to ensure your company is properly registered and managed in the UK.
