Owning a business in the UK has long been a lucrative proposition for non UK citizens, particularly for residents of other EU countries. The UK is the world’s fifth largest economy. Having a business in the UK provides access to the country’s huge marketplace comprising 66 million people. The UK has the world’s 25th highest per capita GDP which translates to high purchasing power and robust demand for the products and services you intend to sell. Moreover the pound sterling (GBP) is one of the world’s strongest and most stable currencies. Ongoing policy changes following Brexit are expected to make it less easy for EU citizens to own businesses in the UK. This serves to level the playing field a bit for non-EU residents. Hundreds of successful foreign entrepreneurs own businesses and send money from UK to their home countries. There are a few things to consider before you go forth to own and operate a business in the UK.
Visa
A valid business visa is a legal requirement for most non UK citizens, and should be the first consideration for someone about to setup shop in the UK. A prospective businessperson would typically apply for a visa as an Entrepreneur, Graduate Entrepreneur or Investor. All of these visa classes fall under the ‘Tier 1’ category, which means these are processed on priority. You would need to fulfill certain criteria to become eligible under these visa classes. The requirements consist of having the necessary funds to start your business, language skills, and so on. The list of eligibility conditions for the Entrepreneur visa is available at this link: https://www.gov.uk/tier-1-entrepreneur/eligibility. You can apply online and expect a decision on your UK entrepreneur visa application in as little as three weeks. Do note that this visa category does not allow you to work for any business other than your own.
Legal and formal requirements
You will need to determine the proper ‘legal structure’ for your business. The available choices are sole trader, partnership, limited liability partnership (LLP) and limited company. The first two options do not involve creating a separate legal entity for your business, while the latter two do. In addition to these four there are other less commonly used business types as well, including for cooperatives and non profits. The type of business you choose to own will determine several legal aspects including your registration category for tax and returns, the size of your tax liability, and whether you need to make your accounting public. Based on the business type you register with HMRC (Her Majesty’s Revenue and Customs), you will be expected pay one or more type of taxes. It is important to choose the optimum legal structure based on your long term business projections. Most entrepreneurs elect to seek the advice of professional accountants to help make this vital choice.
There will be additional requirements such as having a registered address for your business. You will need to follow legal guidelines when you employ staff. These are different for UK and non UK citizens. As your business expands you may have more considerations and added tax liabilities such as VAT.
Business climate
The World Bank ranks The UK as seven (worldwide) on the ease of doing business index. It is considered very easy to do business in the UK. This evaluation is based on several factors including the amount of documentation required for starting or running a business, processing time for permits and other applications, the number and amount of taxes to be paid, regulations to comply with, and the protection of property rights. In addition to the administrative and policy factors, economic and social conditions also make the UK a great place for business. A mature economy, low per capita crime, predictable inflation, excellent infrastructure including utilities and transit, access to vast markets, availability of capital, and reasonably priced commercial real estate are just some of these.