A Guide For Foreign Entrepreneurs On Starting A Business In The UK
Successfully obtaining a Tier 1 Entrepreneur Visa is a crucial stepping stone towards launching your new venture in the UK. If you have taken the bold decision to invest £200,000 or £50,000 into a new UK start-up, obtaining entry into the UK is only the very start of your exciting adventure.
For foreign-born entrepreneurs, you will most likely have a multitude of questions, such as;
- what type of business structure should I choose?
- what are the formalities of setting up a company in the UK?
- how do I set out my commercial contracts and terms and conditions?
The answer to these questions is an article in themselves, however for those of you thinking of applying of a Tier 1 Entrepreneur Visa, or have just obtained one, the following covers the essential elements of how to set up a business in the UK.
Deciding on your business structure
One of the first decisions you will need to make is what is the best structure for your business. Most people on a Tier 1 Entrepreneur Visa choose to set up as a sole-trader, traditional partnership, limited liability partnership or as a limited liability company.
There are advantages and disadvantages to each. For example:
- Sole-trader is the easiest way to establish a business in the UK. You simply need to inform HMRC (the UK tax department) that you have set up as a sole-trader and fill in annual tax returns. The main disadvantage is you will be liable for any debts and contractual obligations you enter into for business purposes.
- Traditional partnerships provide flexibility and you will not be required to file accounts at the Companies Office which can be seen by the public. However, without a strong Partnership Agreement, the business may have to be dissolved in the event of a dispute, which could affect your immigration visa. You and your partners will also be jointly and separately liable for any debts owed by the business.
- Limited liability partnerships provide the same flexibility as traditional partnerships, but limit each partners' liability. A Partnership Agreement is essential to ensure the rights and duties of each partner are formalised, along with a record of how much capital each partner has injected into the business. Annual accounts must be filed at Companies Office, which will be open to the public to view.
- Limited liability companies provide advantages such as a low Corporate Tax rate and a more attractive vehicle for future investors. Your personal liability will also be limited and you will be required to file annual accounts.
Setting up a company in the UK
Under the Immigration Rules, you must set up your business within six months of your Tier 1 Entrepreneur Visa date or entry into the UK. If you choose to set up a limited liability company, you will find the process of setting up a company in the UK exceptionally straightforward.
To incorporate your company, you will need to register it with Companies House. They will need details of:
- the name of your organisation
- the address
- the names of the company's directors
- the names of all the shareholders
- the company's Articles of Association which set out the rules which will govern the company, for example, the rights of shareholders and directors' duties
Once your business is set up, you must invest your £200,000 in one of the manners prescribed by the Immigration Rules. You can do this by way of share capital or a director's loan.
Putting in place your commercial contracts and terms and conditions
To operate profitably and minimise the risk of disputes between suppliers and consumers, clear, concise commercial contracts are essential for Tier 1 Entrepreneur Visa holders. A commercial solicitor can help you set out commercial agreements and terms and conditions that protect your best interests and ensure your business activities stay within the bounds of the Immigration Rules.
There are many commercial considerations you will have to bear in mind over the duration of your Tier 1 Entrepreneur Visa, especially if your ultimate plan is to gain Indefinite Leave to Remain, either after five years or through one of the fast-track routes.
Not only can the immigration solicitors at Reiss Edwards assist you to obtain your Tier 1 Entrepreneur Visa, we can put you in contact with experienced commercial law solicitors and financial advisors who can provide guidance on investing your funds and setting up your new venture.
The team at Reiss Edwards consists of some of London's leading immigration lawyers. If you require expert legal advice on obtaining a Tier 1 Entrepreneur Visa, please call us on 020 3744 2797.
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