Starting a company in a foreign country can be both exciting and challenging at the same time. It can be a challenge to navigate the complex intricacies of the legal requirements of setting up your own company in another country such as the UK.
If you are located overseas and want to tap into the British market, the best thing to do is to register a UK limited company. You do not necessarily need to be physically located in the UK to start a company; you can operate an online business while you maintain a physical presence in Britain.
Before you start setting up your company in the UK, there are legal requirements you must understand to be compliant with corporate laws and Companies House. This can be mind-blowing.
What are the advantages of setting up a UK limited company?
Before diving into the legal requirements and compliance for foreign-owned UK companies, let us understand why foreigners should set up a limited company in the UK. It is not necessarily a must for them to set up a physical storefront in the UK, entrepreneurs can operate an online business from the country they are in.
Easy set up
The UK offers an easy company setup to residential and foreign entrepreneurs. Companies House has an easy online registration process; however, if you are new to the legal requirements in the market you can choose to incorporate your business with a company formation agent. Company formation agents help entrepreneurs understand the legal requirements and handle all the paperwork to register their business.
Access to European markets
The UK is at a strategic location that allows easy access to a large European and global market, facilitating international trade. Though your business will be online, you can leverage the internet to tap into the international market. Entrepreneurs can also partner with e-commerce platforms like Amazon and Spotify to access a wider customer base.
Robust legal framework
The UK has a strong legal framework and regulations to provide a reliable environment for online businesses. The framework lays out clear guidelines for online business operations to foster data and consumer protection.
Supportive startup ecosystem
There is a strong network in the UK that supports startups with funding options. The ecosystem also supports startups by offering business advice and a vibrant entrepreneurial community.
Low corporate tax rates
The UK offers the lowest corporate tax rate among developed countries. This allows businesses to retain more profits and reinvest in growth.
Data protection compliance
You don’t have to worry about your customers’ sensitive data since the UK adheres to GDPR, which manages customers’ data effectively.
Limited liability
Forming a limited company will protect your assets from debts and legal implications. A limited company offers limited liability protection to company owners, directors, and shareholders since it is a separate legal entity.
Understanding the legal requirements for foreign-owned UK companies
Registration with Companies House
Every limited and LLP company operating in the UK has to be registered with Companies House. Foreign-owned UK companies must be registered with Companies House and be compliant with the Companies Act 2006. They should also provide information on company owners, directors, shareholders, and managing officers.
Registered office address
According to the Companies Act 2006, every company registered in the UK should have a registered office address. The address should be physical, able to receive correspondence, and be acknowledged by a representative on behalf of the company. The address should be physically located where the company is registered.
Your business does not necessarily need to be physically located in the UK, business owners can use a virtual office address as their registered office address. The virtual office address is legal to be used as a registered address as long as it meets the ‘appropriate’ address requirements. A virtual address is a physical street location in a real building, but businesses do not need to be located there.
Updating information
Businesses set up in the UK must regularly update their information on the Companies House register. Information regarding their beneficial owners, managing officers, company name, registered address, UK establishment details, and any changes to their legal structure, accounting requirements, or principal place of business in their home country, notifying Companies House within 14 days of any changes.
Beneficial ownership disclosure
A beneficial owner (s) is/are an individual or entity that has significant influence or control over the overseas entity. It can be: a person, legal entity, government or public authority, a trustee of a trust, or a member of a firm that is not a legal person under its governing law.
You must register any beneficial owner that meets one or more of the following conditions known as the ‘natures of control’. The most crucial aspect is identifying and disclosing the beneficial owners of the overseas entity.
Document submission
No matter which country you are in, any document you submit to Companies House should be in English. There are also deadlines for submitting documents to Companies House which must be met to avoid penalties and fines.
In conclusion, overseas entities can seamlessly form their limited company in the UK and operate it from anywhere in the world. With a virtual office service, they can register their company without the need for a physical presence in the UK like an office or place of business.
One such company formation agent we spoke to was Icon Offices, who offer company formation and virtual office services, where you can choose the location you want your business to be registered in and get an address. They told us to look for agents offering ongoing support to businesses to ensure they are compliant with the regulatory requirements going forward. Something that could be of vital importance in the future.