Are you a foreign national that wants to start business activities within the UK? It’s really not as difficult as you might think.
The UK is one of the largest economies on Earth. It’s the sixth richest country in terms of GDP with one of the highest wealth per capita of all the economic superpowers. With a very stable economic system, extensive legal structure and diverse consumer market, every entrepreneur dreams of starting up a UK business.
But if it’s not difficult, how exactly do you do it?
This blog from Bizvee explains how to start a small business up in the UK. We’ll look at how you can acquire a limited company, the need (or rather lack of) for an entrepreneur visa, and all other factors that international entrepreneurs want to know.
Can a Non-Resident Start a Business in the UK?
Yes. It may come as a surprise, but anyone of any nationality can start a business in the UK. You don’t need residential status or even to be living in the country. The only stipulation is that the company must be registered to a UK address. This is for accountability and correspondence of information, not for the purpose of legitimizing the ownership of the business. Foreign nationals can easily acquire an address to register with Companies House. This can either be a purchased or rented property, the property of a friend, family member, or anyone else who agrees to have your business registered to their address, or a virtual office address. Bizvee can help you secure an address for your business.
Does a Non-Resident Need a Visa to Start a Business?
There is no need to have a visa to establish a business in the UK. When you set up a business, you are not required to provide proof that you are able to work. Does this mean you can start the business then travel to the UK and work under your own company name? No, it doesn’t. You can start a business in the UK, but that does not give you the right to work in the UK. For example, you cannot start an electrical engineering business then forgo working visas and just start earning money as a member of the UK workforce. It’s just not possible.
How Can You Make Money through Your UK Limited Company without a Work Visa?
Work visas give you access to the UK job market. They allow you to earn money as an employed member of the UK job market and enjoy all the perks that come along with it. To access this, you must have the proper visa. You can still start a business in the UK and even earn money through it, but how does this work?
There are two things you can do. By starting a business in the United Kingdom as a foreigner, you can actively trade goods through that business while working out of your home nation. An example would be if you live in India and sold fashion products. You can start a business in the UK, register with Companies House, and trade under that British brand. Your registered UK business does not make it easier for you to trade within the UK, as you can already sell to UK consumers from a company registered in India. The benefit it does offer is that you’ve got a UK company. You aren’t a foreigner trading through a foreigner business. You’re a foreigner trading through a British business. This gives your brand more sales power within the domestic market.
The other thing you can do is hire people that are allowed to work within the UK. They can then make money through your business in the UK with you earning profits on that income. You yourself cannot work without the visa, but since they have the rights to, your employees can. You’ll pay tax on their earnings just as any other business would, and corporation tax on business income, but you’ll be able to take a salary from revenue after tax is deducted just like any other UK business director.
Important Things to Know about Starting a Business in the UK as a Foreigner
So you don’t get caught off-guard, be aware of these essential nuggets of information when you set up a business in the UK.
- You don’t need a business bank account (but you should get one) — It is not a legal requirement for a non-British national to have a business bank account registered in the UK. However, it is very helpful. If you register for a UK bank account, you can avoid a lot of costs in terms of money movement and fees when it comes to local trade. Having money paid into your domestic bank account is not financially efficient as banks often charge a fee for international transfers — these can take away a big chunk of profit. We recommend signing up for a UK bank account to improve money management. You should note that applying for more popular banks is difficult for foreign nationals without an entrepreneur visa. If you work with us at Bizvee, though, we make partnership arrangements with banks to help progress your application and secure you a bank account.
- You cannot earn untaxed income — When you start a new business in the UK as a foreigner, you are not entitled to the self-employed personal allowance grant unless you have a work visa. This means you pay tax on every penny you earn from your business. You may also have to pay income tax in your home nation. Tax costs can start to ramp up if you’re not careful about how you manage your cash. We can put you in touch with expert accounting teams to help you optimize earnings.
- You don’t have to set up your business yourself — The registration of UK companies may appear to be straightforward, but it can quickly get confusing if you aren’t familiar with basic legal structure and UK business practice. Starting a business requires you to apply for numerous government approvals, including from Companies House and HMRC. If you try to register yourself and make a mistake, you won’t be blacklisted or blocked from ever starting a business as a foreigner national again, but you will face slowdowns and related costs. The best step you can take to mitigate problems with setting up a business in the UK as a foreign national is to employ the support and services of an agent that already has experience with Companies House. Bizvee can help you register a company in the UK as a non-resident.
- You’ll want insurance set up after starting a business in the UK — Once you open your UK business, you’ll want to grab some insurance quickly. Business insurance is a protective measure that helps you navigate the sometimes turbulent landscape of UK markets. Depending on what industry you enter, you may be liable for more responsibilities than others. Insurance can give you reassurance and peace of mind that if anything goes wrong, you’ll have support. It’s not essential or mandatory to register for business insurance, but especially if you’re unfamiliar with UK systems, it can be an important safety net.
How to Start a Business in the UK as a Foreign National
To register a limited company as an overseas national is absolutely no different from that of a British national. You have to provide all the same details and file the same documents. There are no immigration hoops to jump through and the process is free of any additional charges for non-residents.
So how do you register a company as a foreign national? First, you’ll need the following:
- Company Name — Every business needs a unique name. You can use the Bizvee Formations name check tool to find the perfect name for your company.
- Business Address — You must have a UK address registered to your business. If you don’t have access to a UK address, we can help you by registering your business to our prestigious London address.
- Director Information — A UK company needs at least one director, although there can be more. Details of this individual need to be gathered and prepared.
- Shareholders — If you are registering as a public trading company, then you’ll need to issue shares when you start your business. To do this, you need at least one shareholder and all their details. This can be the director or a different individual.
- Documents of Formation — When you register a business you need two sets of documents: memorandum of association and articles of association. These documents are essentially agreements of responsibility by involved parties and arrangements on how the business should be run. At Bizvee Formations, we’re more than happy to help you put together these documents.
Once you’ve followed the steps of collecting all the information you need, you can move onto registration with Companies House and HMRC. Remember, you can change any of the details above if you need to at any point after you form your company. For example, the business address you use now can be changed if you move to the UK in the future, or if you decide to sell your business, you can complete a form that allows you to transfer ownership of the business.