The UK is a top business investment destination. Its advanced and diverse market and world-class infrastructure attract foreign investors and multinational corporations to incorporate in the UK.
The country's advanced industries include Life Sciences, Aerospace, ICT, Automotive Engineering, and Financial Services. These make the jurisdiction an attractive place for investors to register a business in the UK, but it's important to understand the process. You may need help before registering a UK company. Let’s discuss 3 things to know before you do company registration in UK.
1. Established Business Entity
Before registering a UK business, you need to know what business structures are available. In the UK, there are three main types of business entities:
- Sole Trader
Individual sole traders have unlimited liabilities. After taxes, owners can keep all the business's profits. You must earn EUR 1,000 a year to register as a single trader and obtain tax-free daycare. Your business's sales and expense records prove self-employment. As a sole trader, you must file a self-assessment tax return annually.
Limited by shares or limited by guarantee, UK-limited companies can be formed. If your company is limited by shares, shareholders' liability is limited to their unpaid shares. If your firm is limited by guarantee, shareholders' liability is restricted to a “guaranteed amount”. According to UK Companies House, limited liability companies must have a minimum of one shareholder, one director, an official UK registered office address, and no minimum paid-up capital.
A public limited company (PLC) listed on the London Stock Exchange can raise funds by selling shares. According to the UK Companies House, PLC requires a minimum of 2 directors, 2 shareholders, an official UK registered office address, a company secretary, and EUR 50,000 in capital, 25% of which must be paid upfront.
In a partnership, you and your partner share business profits and losses. As long as the entity is a “legal person” (e.g., limited companies), a partner need not be a person. A limited partnership or limited liability partnership can be formed in the UK. One general partner and one limited partner are required in a limited partnership.
The general partner has unlimited liability, while the limited partner has limited liability. Due to the higher risk, general partners have more control over the business and can make binding decisions. Partners' contributions are limited in a limited liability partnership.
2. Permits and Licenses Requirements
The second thing to know before registering a business in the UK is what permits and licenses you need to run your business smoothly and on time. Depending on your business, you may need licenses or permits to play music or sell food on the street.
You can use the UK government's license finder to find out what permits or licenses you need.
3. Responsibilities Depend on Where You Work
The third thing to know before registering a UK business is that responsibilities depend on where you work. If you run a home-based business, you may need permission from your mortgage provider, landlord, local planning office, or council. Your business may need insurance since personal insurance doesn't cover stocks, computers, and other assets. You must follow certain rules if you rent a property for business.
You must first conduct a workplace health and safety risk assessment and eliminate any hazards. The following criteria must also be met: a reasonable temperature, sufficient working space, ventilation and lighting, toilet and washing facilities, safe drinking water, and safe equipment. If the property is in poor condition and you close your business or move out, you may have to pay for repairs.