Can I form a UK-limited company from overseas? This is always a fear that many entrepreneurs have, but not living in the UK cannot stop you from owning and operating a UK-limited company overseas.
We are living in a digital world where entrepreneurs can start a business remotely in a different country and operate it. Companies House and company formation agents offer online company formation services that are easy and fast.
Considering a UK company incorporation? This article will serve as your starting point highlighting essential steps to consider when starting a UK company without living there.
Understanding the legal obligations of starting a UK company
Every jurisdiction has its regulations that surround registering a company. In the UK it is no more or less the same. The Companies Act 2006 regulates companies’ registration. The companies are registered with Companies House either online or by post. Registering online normally takes 24 hours, whereas post-registration can take 8 to 10 days. The worst thing that can happen when registering a company by post is waiting all those days only for the application to be rejected for a single mistake making you go through the whole process over again. It can be time-consuming.
A registered office address is a must-have for formal company registration. But I don’t live in the UK or plan to have a physical storefront! That’s true, and you don’t have to do that since there are service providers who offer registered office address services. For instance, let’s say you want to register your business in London, you can look for a service provider that offers a London virtual office and use it as a registered office address.
The other thing is tax obligations but these come when the company is registered.  In the UK, taxes are handled by the HM Revenue & Customs (HMRC). I’m sure you have come across them while searching on UK company incorporation.
If you plan to hire employees, you will also be required to register for Pay-As-You-Earn (PAYE), which is the income tax and National Insurance. The other tax you have to register for is Value Added Tax (VAT). You can register for VAT if your annual taxable income exceeds £90,000. You can also choose to register voluntarily even if you have not exceeded the VAT threshold.
To culminate the obligation is ongoing compliance. Apart from filing taxes, companies have a legal obligation to file annual statutory records which include Confirmation Statements and Annual Accounts. The dates differ from one company to another since they are filed depending on the company’s accounting period and incorporation date.
How to register a company in the UK
Choose company structure
When starting a company, most people think of registering a limited company since it is the most popular company structure. However, limited companies come in different types such as;
Limited by shares: Shareholders invest in the company by buying shares. When the company faces financial difficulties, shareholders’ personal assets are not at risk.
Limited by guarantee: In contrast to the company limited by shares, companies limited by guarantee are where members agree to contribute a certain amount of money to liquidate the company. It is mostly incorporated for non-profits. If the members are found sharing profits, the company may be struck off.
Limited liability partnership (LLP): This structure offers limited liability to its partners, meaning their assets are not at risk to creditors in case of financial difficulties or legal implications. As much as it has a limited structure, partners must pay their income tax separately.
Other company structures include;
Sole trader: This is an individual running their own business with no need to officially register with Companies House, however, they will need to register for Self-Assessment with HMRC. In simpler terms, a sole trader is a self-employed individual in charge of doing everything in the business by themselves.
General partnership: this is where two sole traders come together and partner to operate a business. Partners will have to individually register for Self-Assessment with HMRC.
As an individual overseas, you cannot form a sole trader or a general partnership. To form these business structures, you will need to reside in the UK.
Choose a company name
A business name is essential to identify the company and its business activities. The name you choose has to be unique, meaning it should not be similar to other company names registered with Companies House. The Registrar has a tool where you can check if the proposed business name is available known as the Companies House name availability checker.
There are also other name restrictions you should look out for such as;
Offensive words: company names should not be offensive or contain offensive words.
Sensitive words: the name should also not be sensitive or contain sensitive expressions. It should not imply a connection with the government, royal family, or other chartered organisation.
End with ‘Limited’: at the end of the name, you should include ‘Ltd’ or ‘Limited’ for private companies, ‘PLC’ or ‘Public Limited Company’ for public companies, ‘LLP’ or ‘Limited Liability Partnership’. For companies registered in Wales, their legal name should end with ‘Cyf’ or ‘Cyfyngedig’.
Choose a registered office address
The address you choose has to align with the provisions set in the Companies Act 2006. The address has to be physically located where the company is registered and it should also be able to receive official correspondence and legal notices.
Since you are based overseas, you can choose a service provider with a registered office address service or a virtual office that aligns with the Companies Act provisions. Service providers often receive your official correspondence and legal notices on your company’s behalf and sort it out for you. Their addresses are also on a real building giving your company a physical presence.
Choose a company director and shareholder
These officers are not necessarily required to be UK residents. Private limited companies need at least one director, this means that you can be a sole director if starting the company alone.
The director and shareholders requirements must abide by the UK law. In terms of age, a director and a shareholder must be at least 16 years old. Directors have roles and responsibilities, so whoever is appointed as a director agrees to abide by and fulfill those responsibilities.
For the shareholder, ensure you state their share percentage.
Memorandum and Articles of Association
You will need to draft a Memorandum and Article of Association. They both state an agreement of forming the company and rules and regulations of the company’s management respectively. If you do not know how to go about these two documents, you can seek professional advice from a legal advisor who can help you draft them.
Registration
You can choose to incorporate your company online or by post, this is if you choose to register independently with Companies House. However, there are company formation agents who can guide you on how to register your company with Companies House effectively. They help you by doing all the paperwork on your behalf and applying.
Onboarding a company formation agent will save you so much time and mistakes. Apart from company registration, they also offer ongoing compliance which can be highly beneficial to foreign business owners since they are not conversant with the legal framework of a UK limited company.
Open a business bank account
Since your business is in another jurisdiction, you will need a UK business bank account. This account will help you track your business transactions and easily transact with your UK companies.
There you have it! Starting a UK company is possible and easy. You are not required to be a UK resident to own a business, you can register it online and operate it remotely.
Company formation agents like BusinAssist can help you incorporate your UK company seamlessly at an affordable price. They are a one-stop shop, meaning apart from incorporating your company, they offer registered office address services, free bank account, mail handling, ongoing compliance, and telephony services to help you maintain local communication with your customers.
You can contact them at [email protected].
