You must comply with primary legal requirements to own a UK business. You need to select one of the UK company types to establish your company and become a business owner. In terms of defining the legal liabilities applied, it is crucial to choose the UK company type accurately. Well then, how can you establish a UK company? What are the advantages?
What are the requirements for setting up a UK business?
You must meet specific requirements to establish a company. Current or future UK-resident citizens can start their companies in the UK. You can establish a company with a business address and director details. Also, the business owner does not have to be a UK citizen. The company partner can also be the director.
What are the advantages of establishing a UK company?
Setting up a company in the UK offers many advantages since it is the center of international trade. We can list these advantages as follows:
- If you want to initiate a new project or execute the available ones, the UK has fewer restrictions compared to other countries. Thus, coming up with a new idea and implementing it is easier.
- Taxes are included in a manageable system. Compared to other countries, the tax system is also quite simple.
- If you establish a UK business, you can easily open a PayPal account and conduct your transactions.
- The workers to be incorporated into the company structure are qualified personnel. The UK is a country with highly skilled labor. It also offers low labor costs. It means lower expenses for employers.
- It has a robust infrastructure to conduct business. Infrastructure is of great importance for business growth.
- Based on the country’s needs, a country can renew its regulations in areas such as law, tax, finance, etc., meaning carrying out agreements where different clauses are established with each country. In the UK, with increased flexibility, you can have a well-positioned company in the future. You can react swiftly to global events or market changes and take measures accordingly.
- One of the advantages of setting up a UK company is the corporate tax rate of 19%.
- The UK has double taxation agreements with many countries such as the Netherlands, Poland, Canada, and Germany, creating great advantages for investors.
- Establishing a limited company does not require a minimum amount of capital.
Besides the many reasons for setting up a business, there are also various UK company types. Starting your company without wasting time is the right thing to do if you have an initiative, an idea, and savings.
What are the UK company types you can establish?
In the UK, there are four standard types of companies. These are;
1) Sole Trader Business
The easiest way to establish a UK business is to become a sole trader. A sole trader owns and runs their own business as an individual. Also, a sole trader business doesn’t have any legal identity separate from its owner. All the profit of the company belongs to the sole trader. However, sole traders must pay income tax and national insurance payments using their own income. Since it is a sole trader business with no legal identity, only the business owner is liable for the losses incurred.
A partnership is a type of company where two or more partners establish a business. Founding partners share the company’s income, risk, liabilities, profit, and loss. Besides the earned income, the taxes to be paid are also divided among the partners over the profit share.
3) Limited Liability Partnership (LLP)
A limited liability partnership is similar to a partnership type of company. However, there is one difference. The business liabilities of two or more partners are limited to the capital they invested in the company’s establishment. The earned income of the partners is calculated with the tax amount to be paid from the partners’ profits on their share.
4) Limited Company
As the most common UK company type, limited companies have a general structure, including shareholders and managers. While shareholders own the company shares, managers are responsible for the management of the company. If requested, a shareholder can also be a manager.
A limited company is a legal entity. Thus, a company’s profit belongs to itself if taxes are paid. The realized profit is divided among shareholders and stakeholders.
With Workhy, it’s so easy to set up your company in the UK!
With Workhy, you can start your UK business by making an application from wherever you are. Moreover, you can stay in touch with your customers and service providers via your local address in the UK by benefiting from our yearly business address service. UK accounting transactions are challenging. Workhy offers its customers an expert and local accountancy partner network.