5 things you should know before setting up a business in the UK
Setting up a business can be a challenge and particularly when setting up new operations internationally. Thinking about doing business in the UK? Here are 5 things you need to know before you get started.
- 1A business plan is essential – This may seem obvious, but it is surprising how many companies don’t have one. A business plan can be an essential part of whether you receive funding or strike up successful partnerships. It’s worth taking time to develop details about your business aims and strategy before setting up or expanding your business in a new market. It will focus your efforts and assist your professional advisers identify things that could affect your business and its operations. It will also help with finding the right business location and may be requested when opening a bank account.
- 2Choosing the right business structure – With a good business plan in place, choosing the right structure for your new venture should be much easier. In the UK, several business structures are available, but the most common ones are, a limited company, and a UK establishment. A Limited company is registered as a legal entity at Companies House and it is normally possible to set it up within the same day, or the next day. A UK establishment is a branch or a place of business and is not a separate legal entity from its parent company. Which structure is best suited for your business will depend on what the business’ strategy and aims are by expanding internationally. Choosing the right structure is important, because this can also affect how the business is taxed.
- 3Finding offices – You may not need office space immediately and a virtual office address can be arranged quite easily at a low annual cost. This can range from just a simple UK business address with mail handling, to including services such as telephone answering and meeting room hire. If you only need a small office, a co-working or serviced office space may be an ideal alternative. In reality, where firms choose to locate is based on a variety of factors, such as market access, infrastructure, skilled labour and financial incentives. Office brokers can assess your exact requirements and arrange appointments for viewing properties. Business rates are payable on most non-domestic properties and the rate is based on the rateable value of the property.
- 4Be prepared when hiring – Hiring an employee isn’t as simple as paying someone, although the UK employment laws tend to be employer friendly. If you’re hiring an employee for the first time, there are many things to consider. This includes checking that they have the legal right to work in the UK, either because they’re an EU national, or have the correct visa. The UK operates a 5-tier system, which is points based and with some visas taking 6 months to be issued, early planning is key. Other things an employer must do includes getting Employers Liability insurance, and informing the tax authority (HMRC) by registering as an employer. The employer must also comply with UK employment laws, which provide minimum requirements and include paying minimum wage rates. New auto enrolment pension laws have recently come into force in the UK and most employers now have an obligation to provide employees with a workplace pension.
- 5Consider VAT – VAT can often get complicated and businesses who plan to trade in the UK, should consider the implications of Value Added Tax (VAT) from the outset. Businesses who make taxable supplies in the UK must register for VAT once they exceed the annual registration threshold, which in most situations is currently £85,000 (Nov 17) . For overseas traders, even if they are non-resident, the obligation to register can take effect in different situations and is often triggered immediately by storing goods in warehouses the UK. The burden to get the VAT right and meet all the compliance obligations is on the company and as the most complicated of all UK taxes, most businesses seek professional advice when it comes to dealing with VAT.
Axada has years of experience in helping firms set up and operate in the United Kingdom and the European Union. Axada offer three VAT registration services with tailored simple packages for e-commerce clients. For easy access to specialist accountancy and tax services, all in one place, and to find out more about setting up a business in the UK, contact our friendly team.
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