How to set up business operations in the UK
The United Kingdom is a booming market for startups, with over 660,000 new companies registered every year.
If you’re considering expanding your business to the UK, you are probably aware of the various benefits of operating overseas. But how do you take the right steps to set up business operations in the UK?
Follow these steps and watch your business grow.
Obtain a business license
You may need to obtain a number of permits or licenses in order to legally operate in the UK depending on your business type.
The following business categories are among those that require specific licenses:
You can check on GOV.UK's License Finder if you’re unsure which licenses or permits your business will require. Their online tool will direct you to the right point of contact for support.
Register your business and designate your legal form
Next you will want to designate a legal form and register your business with HM Revenue and Customs (HMRC). Legal form, also known as legal status, identifies the classification of your business.
Registering your business as a sole trader means you are the sole individual responsible for your business and accounting responsibilities. This is also known as self-employment.
Someone who registers as a sole trader will receive all of the business’s profits post-tax, but is also responsible for any losses.
A business registered as a partnership is run by two or more individuals or limited companies.
These individuals share equal responsibility for the company’s debt and finances, as well as accounting responsibilities. They are also equally responsible for any business losses.
Limited companies keep the business’s finances separate from those of the owners, but come with more managerial and accounting responsibilities. Shareholders privately own this type of business.
Business owners of limited companies are responsible for business debts only up to the value of their shares. Limited companies are expected to pay Corporation Tax.
Registering your business
When you set up your business to operate in the UK, you need to register your business with HMRC based on the legal form you designate.
For example, sole traders need to sign up for self-assessment so that HMRC can collect self-employment income tax. If you’re registering your business as a partnership, you need to designate a nominated partner who oversees tax forms and keeps records.
Registering for self-assessment and partnership is free, but other legal forms may require a small fee.
Familiarize yourself with UK business laws
Familiarize yourself with all the necessary information needed to run a business in the UK before setting up operations.
The GOV.UK business section contains a plethora of helpful information on setting up and legally running a business in the UK, including information on:
Employee expenses and benefits
Copyright patents and trademarks
Use this resource to help you navigate potential roadblocks and red tape.
Be sure you’re following the right rules for your specific business, especially if you sell goods online, buy goods abroad, sell goods abroad, or store/use personal information.
Insure your business
You’ll need to apply for business insurance if you want to protect your business against potential threats. What type of insurance depends on what industry your company is in, but the following are some of the most common types:
Commercial property insurance
Professional indemnity insurance
Public liability insurance
Employers’ liability insurance
Carry out your administrative duties
Once all of the legal prep is out of the way and you’re cleared to start your business in the UK, you’ll need to take care of some administrative responsibilities.
Consider whether you are transferring workers from your home country to your UK base. If so, they may need to obtain a worker’s visa or other permit to legally work.
Otherwise, you may hire agency workers, freelancers, contract workers, or permanent paid employees. Designate who will run payroll and provide employee insurance, workplace pensions, and so on.
Make sure you abide by local minimum wage rules, provide a legal contract of employment within two months of someone starting work, and make the required social security and pension contributions.
To help you navigate these legal requirements, consider enlisting the support of global employment software such as Oyster. Oyster makes it easy to remain compliant while hiring and operating overseas with their local HR and legal expertise.
"With Oyster, companies hoping to hire UK-based employees can generate compliant contracts, pay employees on time with the appropriate tax deductions, and manage benefits for their distributed team."
Accounting is a crucial part of running any business, whether it’s in your home country or abroad in the UK. In addition to being a legal requirement, it’s essential to gain insight into your finances and make strategic plans for your business.
Businesses often feel forced to decide between handling their accounting internally, which can be time-consuming and error-prone, or outsourcing to an accountant. But
nowadays, there’s a better solution: accounting software and accountants who understand the eCommerce niche.
For example, A2X helps online retailers by linking their eCommerce platforms and
accounting systems for automated and accurate accounting. A2X posts summarised statements into your accounting system that reconcile with bank deposits. This saves time, eliminates the risk of human error, and ensures compliance.
When you're looking to hire an accounting firm, it's important to consider whether you're better off working with a team of generalists, or one that focuses on your niche.
Generalist accounting firms are akin to a “jack of all trades” in that they are able to look after most types of businesses by providing the standard range of services that are often required. These may include VAT filing, income tax returns, reconciling payouts, virtual CFO advice, and so on.
By contrast, niche firms have a narrow focus on who they serve, but they bring deep expertise to the table.
For example, an eCommerce accountant only looks after online sellers. By honing in on such a specific group of customers, they are able to refine their tools, processes, talent, networks, and automations to maximize the value for their ideal clientele. As a result, they provide a more streamlined service and remain better equipped to stay on top of changes in the industry.
Generally speaking, you'll get more value from partnering with an accountant that focuses on your niche.
To start making transactions, you need to first go through the process of opening a UK bank account.
You’ll need the following in order to set up your UK account from overseas:
Official proof of identity for all business partners
Proof of address on an official mail item or bank statement
Contact details and full business address
Estimated annual turnover
Certificate of incorporation, memorandum, and articles of association (for limited companies)
Think ahead to make sure setting up your UK bank account won’t cause unnecessary delays to starting business. If your company uses a specific bank, check if they have any operations in the UK, which may speed up the process.
One way to streamline your business payments is to use virtual payment cards. Virtual payment cards are debit or credit cards created online that facilitate online transactions.
These cards are accepted almost anywhere that traditional Visa and Mastercard are accepted, but are generated entirely online. With virtual payment cards, you can designate spending limits as well as choose currencies so that paying for things internationally isn’t a hassle.
Airwallex’s virtual payment cards also have zero international transaction fees.
Value-added tax (VAT)
Don’t forget about value-added tax, or VAT.
VAT is a type of tax that doesn’t exist in the United States, so familiarizing yourself with the VAT process before expanding to the UK is crucial. It applies to most goods or services bought and sold for use in the EU and is charged as a percentage of the price.
VAT is collected from businesses via partial payments and paid to revenue authorities.
Resources such as hellotax can take worrying about VAT off of your plate, so you can focus on expanding and running a successful business. VAT software from hellotax puts all of your VAT registrations and filings on autopilot.
Inventory and shipping management
When it comes to listing and managing your inventory, turn to JoeLister, which provides a quick and easy way to list and fulfill your inventory on multiple eCommerce sites by automating processes like listing creation, multi-platform catalog and inventory sync, and FBA order fulfillment.
Additionally, take advantage of specialized companies like Zee to streamline your operations. As an importer of record (IOR), Zee facilitates partnerships with international freight and simplifies quick customs clearance on international eCommerce businesses.
“As an international Amazon seller, if you work with individual brokers in every country your goods are going to, you’re adding undue complications to a shipping situation that could be a whole lot simpler. With Zee, you only need one wingman to help take your empire from local to global.”
- Rael Lowenthal, Head of Business Development, Zee
Airwallex: your resource for overseas expansion
Expanding your business to the UK doesn’t have to be hard. With this guide, you should be able to see global growth in no time.
Need more information and support? From virtual visa cards to international online payment products, foreign currency accounts, and more, Airwallex is your No. 1 resource for modern, global business support and border-free finances.
Sign up today to get started.
Related article: 15 signs you should switch to an online business account
Margaret runs marketing for Airwallex US, working with great companies across eCommerce, consumer goods, consulting, and tech to deliver excellent experiences to shared audiences.
How to manage team expenses with virtual debit cards