In spite of Brexit, the UK is still a place of enormous opportunity. As one of the top five economies in the world and one of its largest and most developed consumer markets, the UK is a prestigious location for businesses. It’s also a favoured destination for Indian businesses, and not without good reason. Indian nationals were among the first immigrants to the UK, and today are the UK’s most successful minority group in both education and entrepreneurship.
To encourage competition, the UK government has made a point in recent years of appealing to international businesses and investors in startups. As such, Indian nationals are free to open and operate a company in the UK - but the specifics may vary, depending on the company structure and industry you choose. Read on for our beginner’s guide to starting a business in the UK as an Indian company and taking that first step on the path to success.
Write a business plan
A business plan isn’t a legal necessity, but your business will be weaker without one. The best business plans serve as blueprints for your business, and a roadmap for your future goals and aspirations. It should ideally be a document that you can fall back on when things are difficult and refer to when things are going well. By doing the requisite research and considering every scenario that could take place, you can ensure that your new business remains agile, reactive and on top of any bumps in the road.
Ideally, you should visit the country to get your bearings, and do a bit of primary research. Look at what is available in retail, what people’s habits are, and get a sense of what people’s preferences are through surveys or other research. Of course, this isn’t always realistic or practical, and much of this research can potentially be done online, particularly if you plan to make eCommerce a large part of your business.
Find out the biggest retail websites in the UK and look at the things they do well, as well as the things you think they could improve on. Look too at the products they are selling, and how the choice available reflects on what you intend to sell. You may spot a gap in the market for your product or find out that the product is marketed differently. Look at the language and graphics used to sell the product - the UK tends to use a lot of slang, in-jokes and local dialects to advertise products, which you might not be familiar with.
Pick a location
If you’re opening an eCommerce business, you’ll want to choose premises with great accessibility. Warehouse space in particular is likely to be cheaper in the north of England, where rent and living expenses are often lower. This region still offers strong transport links by air, rail, road and sea, as well as local talent from a number of universities, but is a less popular place to visit and be based.
On the other hand, premises in the south of England or in Scotland are often seen as more prestigious. You may choose to host your headquarters somewhere like London or Edinburgh and your storage and distribution facilities elsewhere, but the economic realities are worth investigating, as London properties are notoriously expensive.
If you are planning on opening physical retail premises, you should think very carefully about what you are selling and where the audience will be. The makeup of towns and cities in the UK can vary dramatically, with some areas having an older or younger population than others. Niche interests may find more of a home in a large city, where the makeup of residents is different, and where people may be more willing and able to travel to visit your store.
Choose a company structure
As the UK shares much of its historic company law with India, many aspects of formation are likely to be familiar. This includes many of the most popular company structures, including the newer Limited Liability Partnership, which was adopted by India in 2009. A Limited Liability Company (Ltd) is perhaps the most popular structure, as while it must have UK offices, the director(s) of the company do not have to permanently reside in the UK.
Limited companies are legally distinct entities, where shareholders only stand to lose the amount they have invested in the business. Limited companies c
an only source private investments and are more strictly regulated than some other company types. They also pay corporation tax, though they are only taxed on their profits and not expenditure.
Article: Company formation in the UK
The Public Limited Company (Plc) is most popular for expanding businesses rather than startups but may suit a larger business moving to the UK. It shares many of the attributes of a Limited Liability Company but can source public investments. A Limited Liability Partnership meanwhile provides some of the protections of a Limited Liability Company with the traditional advantages of a partnership, including that the business does not need to pay corporation tax.
Bylaws and bank accounts
Similar to Indian incorporation, where you must file documents with the SPICe form, in the UK you are required to submit your bylaws as part of the company registration process. These can be registered for you by a lawyer, but it is usually cheaper to seek the assistance of a specialist company formation agent.
Your Articles of Association should consist of a set of written rules about the running and management of the company, as agreed by the directors, any shareholders and the company secretary. Your Memorandum of Association is a legal statement of your intent to start a company and must be signed by all of your initial shareholders.
In order to open a business account, you will typically need to provide:
- Proof of ID for all directors
- Your full business address
- Contact details
- Company registration number
- Estimated turnover
Unlike in India, you are not strictly required to open a bank account for your UK business. It is however highly recommended, as the prestige and convenience of a UK bank account will make it easier to conduct transactions. Fraud protection can make it difficult for foreign nationals to open an account, so you will require a registered business address first, and should ideally be a UK resident. However, a company formation agent should be able to assist with this as well.
Finalise and incorporate
Once you’ve found an address, defined your business and got your finances in order, you’ll need to file form IN01 to incorporate your business. This should include:
- Your company name
- Which country you’re registering in
- Any provision for limited liability
- Whether the company will be public or private
- A statement of share capital (if applicable)
- A statement of proposed officers (if applicable)
- Your intended registered address
You will next need to register for taxes, namely VAT (value added tax) and PAYE (pay as you earn). Any newly formed business which expects to exceed £83,000 in sales during its first 30 days must register for VAT by law, while others may register voluntarily. You must also acquire employers’ liability insurance from an approved UK insurance company.
PAYE is the system by which HMRC collects income tax and national insurance contributions. An online system allows you to report tax contributions in real time as employees are paid, simplifying your tax responsibilities. Registration can be completed online but may sometimes have to be completed by post. It is best to consult with a formation specialist to establish your individual requirements.
For more information about opening a bank account or company formation in the UK, including cheap company registration, VAT, accountants & visas, please contact us on 0033 (0)1 53 57 49 10 or email us from our contact page and we’ll be happy to help.