How To Set Up A Business In The UK
A lot of people nowadays think they'd like to set up their own business. Thanks to Gordon Gecko, Donald Trump and Alan Sugar, business is no longer boring. Every office minion dreams of being the boss.
We picture ourselves making deals, giving orders, driving a convertible and eating 4-star food with a 5-star wife, in a mansion by the sea.
And why not?
To get these things we have to have money. And how do you get money? By theft or trade.
(Let's assume you don't want to end up in jail.)
How do you trade? You 'set up in business'.
Here's how to set up a business in the UK.
The UK is quite friendly to capitalism, at least in a business's early stages. You can start a sole trader.
UK residents: All you need to is tell HMRC (Her Majesty's Revenue Commissioners) that you're now self-employed. You then submit annual returns after you have traded for 1 year. It's better to hire an accountant to do this, unless you understand accounting terms.
A sole trader can trade as Johnny Fortescue or Johnny Fortescue t/a Smiling Pineapple. The t/a means Trading As. You can get a bank account as 'Johnny Fortescue t/a Smiling Pineapple'. Then Mr. Fortescue can accept cheques paid to Smiling Pineapple.
After being in business a while, he may decide to form a company. This is usually done for tax reasons or because there are more people who want a share of the business. Foreign residents can set up a UK company.
- Read more about going from a sole trader to a limited company
- Read more about forming a limited company
- Read more about what documents you need to form a UK Limited Company
- Read more about what a UK Limited Company is
- Read more about what documents you get with a UK Limited Company
You can register a UK limited company at any address in the UK. It cannot be at a foreign address. This address is public information and will end up on websites.
For these reasons people use an accommodation address like ours and get their mail redirected.
- Read more about mail redirection
- Read more about how to change a UK company's Registered Office
- Read more about how to choose a mail forwarding address
When you've got a company set up, the next thing you'll need is a bank account. You shouldn't use your personal bank account for your company's finances. It will look strange and will lead to accounting problems.
- Read more about how to get a UK bank account
The next thing you'll need is a UK telephone number. Thanks to the break up of utility monopolies, telecoms are now quite cheap here. You can buy a number and redirect it anywhere.
- Read more about what kind of phone number to get
When the business takes off you may get tired of working from home or need to take on some staff. You can communicate via the internet but 'face-time' can be very important. A halfway-house is renting desk space for a day or two a week.
- Read more about hot desking
When your Limited Company has been running for a year, you will need to submit returns to HMRC and Companies House.
- Read more about submitting annual returns
- Read more about annual returns deadlines
If your income goes above a certain threshold, you will need to register for VAT. This is the UK's version of a sales tax.
- Read more about registering for VAT
Businesses in the 21st century are reliant on the internet. Office and media software is very expensive, especially when you have to buy licences for a group of people. There are open-source and free alternatives available.
- Read more about free business software
In time, your business may fail and you need to close it down. This is not the end of the world. It happens all the time. The trick is to make it as painless as possible. Some people go down in flames and some make a smooth exit, stage-right.
- Read more about how to close down a business in the UK
A business which is in trouble will attract nasty phone calls and letters. This is normal. Debt collectors go through a list of tricks to get you to pay up. That's fine. It's their job, and you do owe the money.
It can, however, be a very unpleasant experience. When there's simply no money to be had, you don't need the hassle. First-time businessmen can get very upset about receiving legal letters in the post.
Again, this is normal. Many people have gone through this before. Some even factor it into their business model!
- Read more about what to do if you are sued
Ok, that's about it for setting up a UK biz.
While the locals man about red tape, it's a lot easier to operate here than in, say, Spain. The government tends to leave you alone unless you're dumping cyanide into the canal. During the 80's making money became fashionable and that allure continues. Britain failed to support its manufacturing industries in the 70's, due to industrial strife, so now relies on finance and services industries to generate the moolah.
This means that the small businessman is generally encouraged to succeed, so as to generate the lovely tax revenue to support a first-world welfare state.
Things do get pricey if you have a high-street premises. Then the local council will sting you for business rates and your landlord will charge stupid rents.
(This is why high streets have boarded-up shopfronts outside of boom eras. No one except bookies and loan-sharks can afford the silly rents.)
Be aware that there is still a class-system here and that while you might be making mega-bucks, you still won't be good enough for some people. Well, so what!
Britain has a 1500 year-old civilisation. It once ran the world, so you can expect the locals to have a 'been-there, done-that' attitude. You're not really 'in' until the fourth generation. There's us and there's them and only a Californian acid-head expects permission to marry your daughter on first meeting.
Otherwise, it's a 20% tax rate and a first-world infrastructure, with every opportunity to succeed!
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