If you are planning to join the millions of entrepreneurs in the UK, you need to register your company in the country and fulfill all the other legal administrative requirements before you can
set business in the country. Depending on the kind of business you seek to set up, you may be required to have several permits and continue renewing the permits after a given period. Here are some of the administrative and legal requirements that you must fulfill.
Check Your Legal Status in the UK
If you are not a UK citizen, you need to determine if you are legally allowed to open a business in the UK. If you are non EFTA/EU citizen, you should ensure that you have the necessary residence permit and visa. Talk to the immigration office for the same.
Decide the Legal Structure of your Business
The business structure that you open determines the taxation regime as well as other permits and regulations that will apply to your business. In the UK, you can open one of the several types of business that includes a general partnership, a sole trader business, limited partnership, or a private limited company. Other legal entities include a public limited company, unincorporated association and a social enterprise.
A freelance business is registered to as a sole proprietorship. The only requirements for freelancing are to pay the right amounts of national insurance and income tax. If you want to open a branch of a business that is registered overseas, you would need to register as an overseas company at the Companies House.
Requirements for Starting a Partnership
In a general partnership, the law requires you to share responsibility, debts, and profits equally. However, in a limited partnership, one of the partners should be a general partner running the business in the UK and is liable for business debts. The limited partner will only be liable for the amount they contributed.
Requirements for Starting a Company
If you are to open a limited company, you will be required to have at least one director. Since the legal entity of the business is different from its owners, the shareholders will be required to purchase a share in the company. The paid-up capital will be deposited in the company bank account by the time of opening the company.
You will then be required to come up with an agreement on how you will run the company, responsibilities of the directors and voting rights for different shareholders. This agreement will be required at the time of registration. Remember, there are records that you will have to keep that include the financial records, transaction records and details of the shareholders. You will register under the Corporation Tax bracket at the HM Revenue and Customs.
Starting a Public Traded Company
If you are opening a Public traded company (PLC), you and other shareholders will need to have a combined minimum share capital of £50,000 with 25 percent of the amount paid before registering the company. In the UK, social enterprises such as community interest companies and charities are treated as limited companies with profits required to be invested in projects that meet the community, social or charitable objectives. If you are opening an overseas company, you will be required to fill the OSIN01 form and pay a fee of £20 within a month after opening the business.
Taxing for Different Structures
It is important to know how taxes will be applied to your business depending on the legal structure that you pick. All businesses are required by the law to register with the HMRC for taxation purposes. The business owners are responsible for submitting their tax returns. If you register a sole trader or a partnership, your taxes will be paid on the business profits. Limited and overseas companies are subjected to corporation tax at a rate of 20 percent on profits after subtracting any relief and allowances.
Payment of Taxes
If your business turnover is more than £83,000 a year, you will be required to register for VAT. If you sell any business assets in the course of doing business, a capital gains tax will be paid as a percentage on the profit. The tax year in the UK starts on April 6. Tax payments must be made by the end of January in the year after the end of the tax calendar year. If you employ employees, the law requires you to run a payroll, pay National Insurance for all of them and provide a pension for eligible staff.
If you are starting a professional firm such as accounting, pharmacy, and hospital, banking or a law firm, there are specific bodies and permits that you should have by the time you are registering the business. If selling liquor, you would need a liquor license. Hotels and restaurants require food hygiene certificate, PRS for the music license, Alcohol license, and food premises approval, among others.
Requirements for an accounting firm
Any firm that provides accountancy services must be registered with such bodies as ACCA (Association of Chartered Certified Accountants) and AAT (Association of Accounting Technicians). Owners may complete the CIMA, ICAEW and AIA qualifications although they are not mandatory. Besides, the firms must get authorisation from HMRC to deal with them on tax matters on behalf of the client.
Requirements for a Bank
Bankers are regulated and monitored by the Financial Conduct Authority and the Prudential Regulation Authority. The PRA is responsible for prudential regulation of the financial sector while the FCA regulates the conduct of financial players in the UK. These two bodies must register you before starting your bank.
Besides, you are required to have a start-up capital of at least 4.5 percent of the overall credit exposure. This figure goes up after operating for some time. The FCA checks your suitability before giving the PRA a nod. The bank will then be registered as a limited company.
Accounting and Budgeting for your Business
When you start running your business, you are required to keep financial records for calculation of tax and to manage your cash flow. Some of the accounting software solutions that you may use for the purpose include Quickbooks, GnuCash, Zoho Expense, Sage and Accounting Seed, among others. As for budgeting, you may use Abila MIP Fund Accounting, Budget Maestro, Acumatica ERP, and Account Edge, among others.
Insuring your Business
A risk such as fire, theft or flooding may wipe out your entire investment within a few hours. You may not prevent most of these risks by insuring your business against such risks. If you are offering professional services such as legal services, medical treatment, and business advisory services, consider a professional indemnity cover. The cover indemnifies you against risks related to service delivery.