Impact Brixton is home to a diverse community of amazing creatives from all over the world. And the good news is, you absolutely can start a business in the UK if you’re a foreign national!
The process of setting up a business is slightly different if you’re a foreign national, and there are a few things that you’ll need to make sure you tick off. But don’t worry! We’ve put together this simple guide so that you can make sure you’ve done everything you need to do to start trading as a foreign national in the UK.
Can you set up a business in the UK if you’re a foreign national?
Yes, you can set up a business in the UK if you’re a foreign national, as long as you live and work in the UK. There are a few steps you’ll need to follow to make sure that you have everything you need in place to start trading in the UK in 2024 – including making sure you’re up to date with changes to regulations for setting up and running a business that come into force this year.
Here’s a step-by-step guide to what you need to do to set up a business in the UK if you’re a foreign national.
1. Check your legal status
This is super important. EU citizens who lived in the United Kingdom before 1 January 2021 may be eligible for the EU Settlement Scheme, although the deadline has passed for most people. However, most foreign nationals will need to apply for a work visa before they’re able to start a business in the country. Read on to find out how to get a work visa for the UK!
2. Apply for a visa
If you do need a work visa for the UK, you should apply in plenty of time before you start trading, as it’s illegal to start a business in the UK without a work visa if you’re a foreign national. There are a number of visas available for entrepreneurs coming to the UK, including the Innovator Founder visa. In order to qualify for this visa, your business needs to be new, and you must have an original business idea which is different from anything else on the market. You have to prove that your business is viable, with potential for growth, and scalable, with opportunities to create jobs and grow into national and international markets.
You’ll usually get a decision on your application for a visa within three weeks.
3. Create a business plan
A business plan is usually where you lay out your evidence that your business is viable and scalable, so it’s a good idea to create one as part of your visa application process. Writing a business plan is also great because it requires you to research the market, identify your target audience, and assess the competition. This will allow you to create a solid business with a higher chance of success, as you’ll have thought strategically about its placement. Writing a business plan doesn’t have to be daunting. There are lots of templates available to help, but don’t feel you need to stick to them. Present the information in a way that works for you.
How do you set up a business in the UK as a foreign national?
Once you’ve received your work visa, you’re ready to set up your business in the UK. Here are the steps you need to follow.
1. Choose a business structure
When starting a business in the UK, the first thing you need to do is choose a company structure. The most common options for business structure in the UK are as follows:
Sole Trader (Self-Employed)
As a sole trader, you are the sole owner and operator of your business. You can run the business in your name or under a trading name, so you’ve still got the option to build a brand.
Paying your taxes is fairly straightforward – you’ll just need to pay Income Tax and National Insurance Contributions (NICs) on your business profits through the UK self-assessment system.
The advantages of being a sole trader or self-employed is that it’s low cost, easy to set up, and you retain full control of your business operations. However, the disadvantage is that you have full liability for any debt you incur, so your personal assets aren’t protected.
Limited Company (Ltd)
A limited company is a separate legal entity from its owners (shareholders). Unlike a sole trader business, where you are entirely responsible for any debt your business incurs, any shareholders’ liability for a limited company is restricted to the value of their shares.
When it comes to taxation, Limited Companies have to pay Corporation Tax on their profits, and shareholders must pay Income Tax on any dividends received.
There are tons of advantages to setting up a limited company. These include limited liability and a more professional image for your business. There are also plenty of opportunities for growth and raising capital, so it’s a great option if you’re planning to scale your business. The disadvantages of setting up a limited company in the UK are that there are more complex administrative requirements, including filing annual accounts with Companies House.
Partnership
A partnership involves two or more individuals running a business together. You share any profits, and each partner pays tax on their share of the profits. A partner does not have to be a person. For example, a limited company counts as a ‘legal person’, so can also be a partner.
In terms of small business legal requirements in the UK, for partnerships you’ll need to select a ‘nominated partner’ to take responsibility for managing the partnership’s tax returns and record keeping. Each partner must then report their share of the business profits on their personal tax return.
There are lots of advantages to setting up a partnership for your small business in the UK. Partnerships are easy to form, manage and run, and you’ll have more potential to raise finance. The disadvantage to setting up a partnership is that you and your partners have full liability for any debts your business incurs. You also have to share control of your business, so it’s really important that you partner with people you can work with well.
Limited Liability Partnership (LLP)
In a limited liability partnership, members’ personal liability is limited to their capital contributions. This is unlike a regular partnership, where all partners are responsible for all of the debt incurred by the business.
When setting up an LLP, you’ll be required to draw up a deed of partnership, which will outline your partnership’s liabilities, ownership, how profits of the business are split and what happens if one partner wants to leave.
In terms of compliance and regulations for small businesses in the UK, at least two of your partners will need to be ‘designated members’ responsible for filing annual accounts. Each partner must then register as self-employed and submit a separate tax return. You’ll also need to register your limited liability partnership at Companies House and file the accounts for your business annually.
The benefits of setting up a limited liability partnership is that there’s more protection for members’ private assets, flexibility in management, and tax transparency. The disadvantages of setting up a limited liability partnership include that it’s more complex than a regular partnership, and you have to register with Companies House and file annual accounts.
2. Choose a name for your business
The name of your company is often the first thing that customers and clients encounter, so it needs to be professional and reflect your brand. In the UK, no two businesses can have the same name. So you’ll need to use the Companies House name checker to make sure that no one else has registered a company using your business name already!
3. Register your business with Companies House
This is a really important step for setting up a small business in the UK. It’s a legal requirement for all companies to be registered with Companies House within three months of starting to trade. There is one exception, though! Sole traders do not have to be registered at Companies House. To operate as a sole trader, you just need to register with HMRC for Self Assessment.
Whether you register with HMRC, Companies House, or both depends on your chosen business structure (you can find a helpful outline of the different business structures available earlier in this article!). We’ve outlined everything you need to do for each structure in this clear and comprehensive guide. Check it out!
4. Consider taking out a virtual office
When you register your business with Companies House, you’ll need to provide an address for your company. It is perfectly legal to use your home address if you don’t have a physical address for your office. However, it’s worth keeping in mind that Companies House is a public record, which means that anyone can access the information it holds. So you might not want to use your home address!
Instead, lots of small business owners in the UK choose to use a Virtual Office. This is a service that allows you to use your provider’s address as your company address, instead of your own. The advantage of using a virtual office for your business is that you can choose a provider with an address in a prestigious business district, boosting your brand with an impressive postcode. For example, if you use Impact Brixton’s Virtual Office, you can use our address at SW9 8LA – right in the heart of Brixton Village, a renowned hub for small businesses.
Your virtual office provider will handle all of your mail, and there are usually options to get your mail forwarded in the post or scanned and emailed to you directly. Impact Brixton’s Virtual Office packages start from just 0.41p per day. And you can book in for a 1:1 with our founder Gerald to help you with your business plan and the logistics of getting your company registered!
Frequently Asked Questions (FAQs)
Can you start a business in the UK as an international student?
No. Unfortunately, if you’re living in the UK on a Tier 4 Student visa, you’re not eligible to start a business while studying. However there’s nothing to stop you developing your business idea alongside your studies and taking advantage of any resources available at your university or college. This is a great time to create a business plan, and consider applying for a work visa when you’ve finished your studies.
How do I open a branch of my international business in the UK?
Opening a branch of an international business in the UK requires many of the same steps of setting up a brand new business in the UK.
The first thing you need to do is register your new branch with Companies House. You’ll need to give that branch a name, and you can either use the original company name or an alternative title under which that company is planning to trade in the UK.
You’ll need to provide some supporting documents to Companies House. This will usually include a certified copy of your company’s constitutional paperwork along with a translation into English. Companies House may also ask for a copy of your latest accounts, again with an English translation. There’ll also be a fee to pay for registering.
There may be particular disclosure requirements for your company, so it’s a good idea to speak to an expert specialising in registering an overseas company in the UK before beginning the process.
How do I get a visa to start a business in the UK?
There are a number of different work visas available for the UK. If you’re planning on starting a business, your best plan of action is to apply for an Innovator Founder visa. You can apply for an Innovator Founder visa if you want to set up and run an innovative business in the UK. This means that it has to be a business idea that’s completely different from anything else on the market. Your business will also need to have been endorsed by an approved body (also known as an endorsing body). There are a number of other eligibility requirements, all of which can be found on the UK government website. This is the most accurate and reliable source of information with regards to the requirements for setting up a business in the UK, so be wary of other websites.
Looking for more advice on how to start a small business in the UK?
Check out our complete guide to setting up a small business in the UK in 2024. It covers everything from choosing a company structure to registering your business with Companies House and HSBC. There’s tons of information in there about insurance and legal requirements, too – all written in a really clear and simple way.
You can also book in for a 1:1 informational session with our Founder, Gerald, when you purchase any of our Virtual Office packages, where you can ask any questions you might have. Gerald will be able to help you with your business plan and the logistics of getting your company registered!
