How To Start A Business In The UK

The United Kingdom encourages and promotes entrepreneurship among millions of self-employed business owners, sole traders, and freelancers. However, the procedures and documentation to start a business in the UK are not immediately apparent to the aspiring entrepreneur.

While registering is a vital step in the process, it is not a guarantee of success. For example, only 40% of businesses survive for more than three years. Why? Because launching a successful company needs meticulous planning and preparation.

Before you launch your business, you must lay a solid foundation that outlines your concept and unique value proposition (UVP) and how you will structure and sell your company and set up your financials.

This guide covers all you need to know on how to start a business in the UK, including the various forms of company structures, administration and visas. From the ground up, we will walk you through a step-by-step process and put you in the best possible position for immediate and long-term success.

Business Types in the UK

The first step on how to start a business in the UK, is to identify the different business types, and select the one that best fits your company’s structure.

Sole Trader
Partnership
Limited Company
Limited Liability Company

1. Sole Trader

You can become a sole trader if you want to work as a self-employed person in the UK or run your firm.

As a sole trader, it is essential to keep your business profits after you’ve paid your taxes. You are personally responsible for any losses your firm suffers. You’ll have to follow specific rules regarding running and naming your business.

As a sole trader, you have the following tasks and responsibilities:

Keep a record of your income and expenses.
Every year, submit a self-assessment tax return.
Pay your tax
Pay the Class 2 and Class 4 national insurance premiums

Also, freelancers are sometimes known as sole traders. To work as a freelancer in the UK, you must register as self-employed and pay the appropriate taxes and national insurance.

Choosing a Business name in the UK

You can trade under your name or use a different name for your business. However, you must register your business name as a trademark if you want to restrict others from trading under it.

2. Partnership

This type of business involves two or more individuals (or companies) forming a partnership and sharing responsibility equally. Profits are split evenly, with each partner paying tax on their portion and sharing debts and losses. There is a standard structure for small firms.

The responsibilities of a partnership business structure are similar to those of a sole trader, except more business partners. A legal agreement defining the agreed-upon share of earnings, losses, liabilities, and ownership between you is required when you start a partnership business.

You will need to do the following while forming a business partnership:

Choose a name
Choose a partner that has been nominated
Register with HM Revenue and Customs (HMRC)

3. Limited Companies

Similar to general partnerships, but with at least one general partner controls the business and is personally accountable for any business debts. There is at least one limited partner in the partnership whose contribution is solely financial and for which they are only liable for the amount they have given.

4. Limited Liability Companies(LLP)

A limited liability partnership is a business with two or more members. A member can be an individual or a corporation (referred to as a “corporate member”). Each member must pay tax on their share of the profits, just as in a regular business partnership, but is not personally accountable for any commitments the business cannot meet.

The following are the first steps in founding a limited liability company:

Choose a company name
Registered address
Having a minimum of two members
Having a contract that outlines how the LLP is essential.
Registering the LLP with Companies House

Guidelines on How to Start a Business in the UK

These are following steps to consider when starting up a business in the UK

1. Legal status for a business

It is essential to ensure that your immigration status permits you to open a business. It may imply obtaining the requisite visa and residency permit if you are a non-EU/EFTA national.

2. Apply for a visa

If you reside outside the UK and plan to start up and run a business in the UK, then you need a visa that permits you to do so. Entrepreneurs with this ambition can apply for two types of visas: the start-up visa and the innovator visa. These are visas that allow Entrepreneurs to move to the UK to run businesses that are viable and scalable in the UK. Read more about them on the UK Government website.

3. Make a Business Strategy

A business plan is vital for UK entrepreneurs. It will assist you in determining whether or not your business ideas are likely to thrive and be long-term viable. In addition, you will need to do market research and budget estimates. The business plan and cash flow prediction templates are available from the UK government website.

4. Decide on the Business model

You must choose the proper business structure for your firm before starting a business in the United Kingdom. For a business to be successful, a lot of thought and strategic planning has to be done with regard to the products or services the business plans to sell, target markets, and any anticipated expenses.

5. Business name and address

Deciding on a business name and address is another step to consider when starting a business in the UK. You’re free to use your name if you’re a sole trader. However, when registering your UK line of business for tax purposes and entering the company register, you will need an address.
Only a few businesses are required to register their names, but others can do so as a trademark to prevent others from trading under the same name. In addition, you must select directors and a secretary, and as well calculate and know your shares, and shareholders, write memorandum and articles of organization, open a separate bank account, and register for corporation tax if you’re forming a limited business.

6. Register with HM Revenue and Customs

It is a must to register your UK business with HMRC for tax purposes. In addition, limited corporations must register with Companies House.

7. Check if your type of business has any special rules

Depending on the line of your UK business, you may need to obtain additional licenses or licenses. It is imperative to do proper research to determine if there are more regulations to follow in order to be fully compliant and not go foul of the law.

How To Obtain a Business Visa In The UK

You can work as a self-employed, or form a business as long as you have the right to work and reside in the UK. The UK visa types listed below can assist you in beginning your own business in the UK.

1. Startup Visa

Applying for a start-up visa is applicable if you obtain an endorsement from a UK higher education institution or an organization with a history of aiding UK businesses.

You’ll need to demonstrate that your business concept is new, innovative, and has room for growth. The application fees start at £363 and go up from there.

A two-year start-up visa allows you to stay in the UK. While a start-up visa cannot be renewed, you can change your visa while in the UK

2. Innovator Visa

This visa is aimed at experienced business people who want to set up a new business in the UK or already have a company that an endorsing body has approved. The Innovator visa is valid for up to 3 years and can be renewed indefinitely.

With an Innovator visa, you may establish multiple businesses, unlike the Start-up visa, which only permits you to do one. You are also allowed to bring certain family members with you as defendants.

If you wish to extend your stay, though, you will have to present a new letter of endorsement to extend your visa and meet the other eligibility criteria. Alternatively, you may also be able to apply for settlement (ILR) in the UK after three years.

You must have minimum investment capital of £50,000 or have invested this amount in the previous year. If you haven’t put money into it, it must come from a government-backed fundraising competition, a registered venture capital fund, or a UK government department.

3. Global Talent Visa

The Global talent visa is aimed to attract individuals who are talents or promise in their field. This visa is issued under 3 categories; Digital Technology, Academia or research as well as Arts and culture. Holders of these visas are able to work as well as run their own businesses in the UK. The individuals need to provide evidence of their excellence in their field and obtain endorsement from the respective endorsing bodies for the different categories. The fee for the application is £608. You can as well work in the UK for up to 5years if you fall into this group.

Conclusion

Several initiatives specializing in various areas, such as finances, taxation, and business planning, can help and support your UK company. The cost of launching a business in the UK varies depending on a variety of circumstances. However, there are several resources available in the shape of UK business grants and loans.

However, If you’re still unsure on how to start a business in the UK, seek legal or financial advice from an expert.

RKY Careers collaborates with tested and trusted companies who are able to support you through the process of obtaining a Start Up Visa, Innovator visa, and Global Talent Visa. We also have industry, business and subject matter experts who can help you enhance your Business Idea to make it scalable, viable and eligible for these visas. Speak to one of our experts today!

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How To Start A Business In The UK