The United Kingdom is well known for its booming market for startups. Thousands of sole traders, startups, and small businesses get their business registered every year.
But starting a business from scratch is not as easy as it sounds. It requires thorough planning and preparation along with the knowledge of the step-by-step process of setting up a business in the UK. In this article Experlu – An online platform for hiring an accountant sharing step by step guide of starting a business in UK.
Steps of starting a business in the UK as a foreigner:
1. The first step is to make sure that you can start a business legally. You need to ensure that you have the required residence permit and a UK innovator visa.
Non-residents can apply for several visas if they want to pursue a business idea in the UK:
- Innovator visa
This visa is for those people who wish to start an innovative business.
To become eligible for this visa, you need to have at least £50,000 in investment funds or have this sum invested already in the previous year.
- Start-up visa
You can apply for a startup visa if you have an endorsement from either an organisation that supports UK entrepreneurs or a higher education institution in the UK.
While it is not necessary to have any investment funding, you need to have at least £1,270 in your bank account for 28 consecutive days before applying for this visa.
The estimated fees of this visa are from £308 to £363.
- Investor visa
The charges for applying for this visa are £1,623, but you must have £2 million to invest in the UK economy to become eligible for this visa.
2.After ensuring that you are legally able to start a business, you need to perform a comprehensive SWOT analysis (SWOT stands for strength, weakness, opportunity and threats) for your business.
3.The next step is to make a business plan that will give an overview of your business. This plan should be for a three to five year period and include at a minimum:
- Balance sheet
- Profit and loss account
- Cash forecasts
- A detailed breakdown of revenue streams
- Funding sources details
- Marketing and sales budgets
- Human capital requirements
4.If you have decided to set up a company, you must register it with the Companies House and HMRC (Her Majesty’s Revenue and Customs). You need to determine the type of your business based on its structure.
The different kind of legal structures for businesses in the UK are as follows:
- Sole trader
You can become a sole trader if you intend to work as a self-employed person or if you wish to run a business on your own.
As a sole trader, you get to keep all the profits generated from the business, but you are also liable for all the business debts.
A partnership involves two or more parties to run a business.
Under the partnership, the profits, as well as the responsibility for the business debts, are shared among the partners.
The different types of partnership under which you can register your business are general partnership, limited partnership, limited liability partnership (LLP).
You need at least two people to start a partnership.
- Limited companies
A company is a separate legal entity from its owner.
To register your business as a limited company, you need at least one shareholder and one director.
There are more responsibilities in a limited company, but the company’s finances are separate from your finances. Your liability is limited to the amount of capital invested.
There are two types of limited companies, public limited companies (PLC) and private limited company (Ltd).
- Social enterprise or a non-profit company
If you register your business as a non-profit company instead of distributing the profits among the shareholders, you must invest them for social or charitable activities.
Opening a separate business current account can help you to keep your business finances separate from your personal finances in an organised manner.
5.Make sure that you have knowledge of the business laws and regulations in the UK.
Check whether you have all the required licences or permits along with the insurance needed for your business. There are free resources available on the HMRC, government and companies house websites.
You can also educate yourself on topics like business tax, debt, insolvency, employment regulations, import and export, etc., to make sure that you overcome all the barriers to business success.
6.As per the budget, the next task is to find funding. Some of the funding sources you can use are bank loans, crowdfunding, startup loans, and startup grants.
7.In the end, you can focus on the other aspects of business like:
- Whether you want to work from home or choose a commercial premise for your business.
- How will you build a marketing strategy for your business?
- How will you build a website for your business?
- Where will you hire human resources?
Who will look after your finances? Have you got any London based accountants in mind?