If you are planning to start a business in the UK as a foreigner, chances are you’ll be joining approximately 15% of the UK workforce when you register as self-employed. However, if you’re not going to be self-employed, you’ll find details below about how to set up your limited company. This short guide will show you what you need to do to start a business in the UK. It will also show you how to get the right documentation and ensure you start off on the right foot.
How to Start a Business in the UK
When it comes to starting a business in the UK, one of the first things you’ll need to do is write a business plan. A business plan will help you to determine if your ideas are achievable. It’s important that you research the market you plan on entering and you prepare your budget forecasts. The good news is that business plan templates are available from the UK government’s website.
What to Consider
Before you can start a business in the UK as a foreigner, you will need to consider some of the following:
- Your visa
You might need to apply for a work visa before starting a business. However, this depends on your nationality. The UK government’s website contains information about this.
- Applying for your visa
If you need to apply for a visa, make sure you apply in plenty of time. Tier 1 entrepreneur visas will be declined or accepted within approximately 3 weeks. However, you can apply 3 months in advance should you wish to.
- Register with Companies House
If you are going to set up a limited company, you will need to register the company with Companies House. This is so that Her Majesty’s Revenue & Customs (HMRC) can ensure you’re paying the correct amount of tax.
- Registering for tax
Every business in the UK needs to register for tax. You can register with HMRC online or over the telephone.
Most businesses start off either registering as a sole trader, a partnership, or a limited company.
- Sole traders
They are wholly responsible for their business’s debts. They will also need to deal with the company accounts and ensure they’re paying the right amount of tax.
These involve at least 2 people running a business. All of the partners share responsibility for the business debts and they will need to deal with the company accounts.
- Limited companies
These separate personal finances from the business finances. However, there are a lot more management and reporting responsibilities. You might wish to hire an accountant to help you set up your limited company.
Rules for your business
Depending on what it is your business does, you might have to abide by some rules. For example, you might need:
- Permits or licences if you wish to sell food, play music, or sell items in the street
You will also find there are some rules to abide by if you:
- Use or store personal information
- Sell goods overseas
- Buy goods from overseas
- Sell goods online
Where you work
You might have some responsibilities if you:
- Work from home
- Rent a premise so you can run your business from there
If you buy or rent a property, it’s likely that you will have to pay business rates. Some small businesses can apply for a discount on their rates whereas others don’t have to pay anything,
Types of Visas for Entrepreneurs
When it comes to applying for a visa, if you already have a Tier 1 entrepreneur permit, you will need to be eligible if you want an extension. You will also need to have:
- Invested at least £200,000 in a UK business (This does not include a director’s loan or a commercial property loan).
- Invested at least £50,000 if your first application was based on you having funds that comes from an approved source.
The British Government will allow you to apply for a visa extension if you registered as self-employed no later than 6 months after you had permission to stay. This is also the case if you were registered as a director no later than 6 months after you had permission to stay.
You will need to prove that you have been self-employed, working as a director, or part of a partnership, 3 months before you can apply for the visa. In addition to this, you should have created no fewer than 2 full-time jobs that have existed for at least 1 year.
Please note, there are a lot of regulations that foreign nationals need to adhere to. However, the most important is that you need permission to work in the UK. If you do not have permission, you cannot start a business.
There are some strict restrictions in the UK that can make it hard for anyone to set up a business if they don’t have adequate funds.
UK Startup Visa
If you wish to apply for a UK startup visa, you can do so if you are from Switzerland or outside the European Economic Area. You wish to start a business in the UK, you’re at least 18 years of age, and you meet the English language requirement.
You will also need to be endorsed by:
- A UK business that has a history of supporting entrepreneurs in the UK
- A higher education institution in the UK
You will also need to show that your business idea has potential for growth, it’s a new idea, or it’s innovation and different to other businesses.
You can typically stay in the UK for 2 years on a startup visa. You will not be able to extend the visa, however, you can switch to a Tier 1 entrepreneur visa if:
- You completed your second year on a Tier 1 entrepreneur visa
- You made the switch from a Tier 1 entrepreneur visa to a Startup visa in your second year
What Foreigners who have set up a business cannot do
As a foreigner in the UK who has set up a business, you cannot:
- Work in another job in addition to working for your business
- Bring any member of your family with you
- Switch to a UK startup visa from another type of visa
- Work as a trainee doctor or dentist
- Settle in the UK with this visa
- Work as a sportsperson
- Get public funds
While there does seem to be some obstacles to those who wish to come to the UK, starting a business could prove beneficial. The UK is a diverse and vibrant place the offers a lot to people from all over the world. If you can meet the UK’s visa requirements, you could start setting up your business very soon.