Although student visa holders are prohibited from starting a business or undertaking business-related activities in the UK, to start a business as an international student, you can apply to switch to a UK Start-up visa while in the UK. The application should be made while your current student visa is still valid.
The bottom line is that to start a business in the UK as an international student, you will need the correct visa and the correct visa is the Start-up visa. The Start-up visa is for non-EEA international graduates (currently on a Tier 4 Visa) with a viable, innovative and scalable business idea that they want to put into practice in the UK.
How International Students Can Start a Business in the UK
Step One: Apply for Your Start-Up Visa
The first step to follow if you want to start a business as an international student in the UK is to apply for a start-up visa. Please note that start-up visa-holders must show evidence of satisfactory progress and show that they are dedicating sufficient time to the development of their business to comply with UKVI’s requirements.
All reasonable expenses related to supervisory visits and reports will be covered by the Start-up visa holder, including travel and accommodation costs, and must be paid directly to the University (not staff).
Step Two: Choose a Name for Your Business
Choosing the name of your business is the starting point to starting a business not just in the United Kingdom, but across the globe. When you come up with a name, it is always advisable to run the name via the Intellectual Property Office search on GOV.UK to ensure that the name is not already trademarked by another company
Your business name must not have any profanity in it and it must not be similar to the name of a company that is legally registered at Companies House, or else it will not be approved.
Step Three: Register Your Business Name
You can register your new business at Companies House on GOV.UK. Please note that the entire process will take you about 30 minutes if you have all the required details ready before approaching them.
In the United Kingdom, you can register your business online but it will cost you £12. It takes on average 24hrs for your company to be registered. Please note that to register a business in the UK, you will need to submit the following document and information:
- A company name
- Valid ID
- Address for the company.
- One or more directors’ names and details (if it is just you, that is fine).
- Details of the company shares, shareholding, and shareholders (with at least one shareholder).
- A Memorandum and articles of association.
- Detailed information on anyone who owns a significant interest or control in the company (this means anyone who owns 25% or more shares or voting rights in the company).
Step Four: Choose a Business Structure for Your Business
The United Kingdom has a wide array of options that you can choose from if you are looking for a business structure to build your business on. The most important thing is that you should select a business structure that will best serve your overall business vision and mission.
You can start your business as a Sole trader, Limited company, Private limited company (LTD or Ltd), Public limited company (PLC), Limited liability partnership (LLP), or Guarantee Company (LBG)
A sole trader is a business type where one person owns and runs the entire business. It is the simplest business structure you can adopt. It is very suitable for any one-person business; this includes independent accountants, web developers, and gardeners among others.
A limited company is a legal business structure, which means the business is a separate entity from its owners. This means the owners are only liable for any business debts to the extent of the amount of money they have put into the business, thus limiting any exposure for business owners beyond their total investment. There are two types of limited companies you can incorporate in the UK.
Private Limited Company (LTD or Ltd)
In a private limited company, the owners privately hold shares. This is the most common and preferred incorporation structure for most small businesses in the UK. Over 5.2 million limited companies are operating in the UK now.
Public Limited Company (PLC)
In a public limited company, shares are available to the public for ownership and purchase. A public limited company must have a value of at least 50,000 pounds before it can trade as a PLC. PLC is commonly used as a structure for major companies after they make an initial public offering (selling a large portion of their shares in the capital markets).
Limited Liability Partnership (LLP)
An LLP is a partnership structure used by many businesses including vets, dentists, law firms, or accountancy firms. An LLP is made up of at least one limited partner and one general partner (there can also be more than one of each), and these partners have different responsibilities and exposure to the business.
Guarantee Company (LBG)
A guarantee Company (LBG) is a structure used by not-for-profit businesses such as social enterprises that seek a legal structure to operate. This structure is somewhere between a charitable status and a limited company. In an LBG no share capital is issued, instead, the members act as guarantors for the company. It’s commonly used by trade associations, schools, and other businesses.
Step Five: Sort Out Bank Account and Tax-Related Issues
The right time to open a bank account for your business is after you have registered the business. This is so because you can only open an account for a legal entity. Just ensure that you choose a bank that won’t overburden your business with too many hidden charges. You can contact an accountant to help you handle all your accounting concerns.
Please note that an accountant will either ask you to pay a lump sum annually or a monthly fee that will cover the ongoing work. The amount you are expected to pay will depend on how well you can negotiate, but it will likely be between £30 and 150 a month depending on the complexity of your business financial matters and filing needs.
Register for VAT (Value Added Tax)
If your business is likely to have more than £85,000 in annual sales, you will need to register for VAT. This is a flat rate tax you must charge on top of any goods or services you sell. VAT currently stands at 20 percent. In the UK once you have a VAT registered and have your VAT number you can purchase products from other businesses VAT free.
Register for Corporation Tax
If you settle for a limited company and it is trading (this means making any financial transaction), you will need to register for corporation tax within three months of starting your business or beginning to trade. Please note that you will be assessed for corporation tax through your annual accounts and will need to pay a flat rate tax based on the profits generated by your business.
Step Six: Apply for Trademark or Patent for Your Business Name and Brand
As a new business owner, you must apply for a trademark or patent for your business especially if you have a unique product or service or business idea or technology, or business process. With that, you will legally own your brand and company name.
A trademark is a legally registered symbol, word, or word representing a business that legally owns it, protecting the business from anyone else using this name or symbol. A patent is an exclusive right granted for a product, invention, or process that provides a new way of doing something or provides a new technical solution to a problem.
Please note you will only be qualified to apply for a patent only if you have successfully invented an innovative technology or product that could be copied by others. A patent grants your legal ownership of this invention and the exclusive right to it, hence providing your business with the needed legal protection.
Step Seven: Purchase the Needed Insurance Policy Cover for Your Business
In the United Kingdom, you cannot legally run a business without buying the needed insurance policy cover. With the right insurance policy cover, your business will be protected when an unforeseen incident happens. If you don’t have the right insurance policy in place and things go wrong, it can threaten the existence of your business.
In the United Kingdom, there are several important insurance policy covers that every business owner should consider buying and some of them are;
- Public Liability Insurance (PLI)
PLI protects businesses against losses suffered by people or customers injuring themselves or sustaining property damage due to the activity of the business, it is one of the most common types of small business insurance. It is of particular importance if you operate physical premises and regularly interact with customers on a third party or business-owned premise.
Professional Indemnity Insurance (PII)
PII is for businesses and professionals that provide advice or services to customers. It protects your business against any claims for damages or legal costs which arise due to acts, omissions, or breaches of professional duty in the daily course of operation. It actively protects your business if advice or service provided negatively affects a customer.
Employers Liability Insurance (ELI)
ELI protects a business that employs staff from financial losses incurred when a staff member experiences a job-related illness or injury. Workplace injuries can be extremely costly for an employer if they are liable. ELI offers protections against this and it’s particularly relevant for businesses that have much staff involved in physical work on their behalf, i.e. manufacturing, event planning, construction et al.
Product Liability Insurance (PLI)
Product Liability insurance (PLI) policy cover protects your business from damage to property or personal injury caused by products your business/company has supplied or sold.
Key Man Insurance (KMI)
Keyman insurance policy cover protects businesses from the loss of a key employee such as a CEO by paying out a large sum in the event of their death or incapacitation. It is effectively life insurance against anything critical happening to a key employee. If your business is entirely reliant on one employee or a small group, this insurance can often help save the business from bankruptcy in a disaster situation.
Landlord Insurance (LI)
Landlord Insurance policy cover (LI) protects business owners who own property from losses sustained as the result of renting that property. If a business owns its office and rents it out to other companies, this type of insurance will protect you from damages caused by a tenant.
Step Eight: Rent or Lease an Office Space
No matter the type of business you intend to run, you need to operate from an office space; an address that will be linked to your office. It could be operating from your home or exploring all the available options when it comes to renting or leasing an office space
In the United Kingdom here are the options available to new business owners who are looking toward renting or leasing an office space;
Co-working spaces allow you to flexibly rent office space or an individual desk at a relatively low cost compared to traditional serviced or private office options. They also offer an environment designed for start-ups with a great community of like-minded entrepreneurs.
Apply for a Business Accelerator
Accelerator programs provide seed investment, mentorship, and office space for a limited time to start-ups and other small companies.
Rent a Business Incubator Office
If you don’t have enough cash, then one of your options is to rent a business incubator office space. Incubators are effectively low-cost office spaces that offer some level of community and network. Non-for-profit companies, charities, or universities typically run them.
Rent Office Space from Another Local Business
In the UK, it is not out of place to find businesses subletting office space to other businesses as long as they abide by the terms and conditions of the rent agreement
Rent a Serviced Office
A serviced office is suitable for business owners that do not have a plan to stay in a location for a long time; they might want to try out their business idea at a location to see if it will fly. Renting a serviced office does not come cheap, but you are sure going to get the comfort and ambiance that will help project your business to high-profile clients and business partners.
Step Nine: Set Up Your Business Facility
In setting up your business facility, you are expected to put in place all that is needed to effectively run your business. You need to buy the needed office furniture, create a filling system (both online and offline), buy the needed software apps, apply and obtain a telephone line preferably a landline, install your business signage and install CCTV and alarm system amongst others.
Step Ten: Source for Funding for Your New Business
In the United Kingdom, loads of entrepreneurs have launched their businesses by leveraging the availability of business loans and start-up grants. So, if you know you don’t have enough money to bankroll your business idea, you can apply for a business loan or start-up grant.
The Start-Up Loans Scheme was launched in 2012 by the British government. It made available 150+ million pounds of public money to entrepreneurs in the form of a favorable, low-interest loan up to the amount of £25,000. Eligibility and facilitation of a start-up loan are carried out by delivery partners who assess each business plan or business case.
The loan is typically payment-free for the initial year where you only pay nominal interest payments each month, with the bulk repayment starting in the second year and being paid back over as much as five years. Please note that even though the loan terms are very favorable you are still obligated to the debt hence you must work hard.
Step Eleven: Develop Your Sales and Marketing Strategy
If you are in business, it means that you have a product or service or a combination of both to sell to your target market. This is why you need to develop a sales and marketing strategy. You should be able to come up with a strategy that will help you get a fair share of the available market in the location where you intend to sell your products or services.
Trust me, the market in the United Kingdom is highly competitive and if you don’t have a workable sales and marketing strategy, you will likely struggle to stay afloat with the business, and if care is not taken you will be pushed out of business.
Step Twelve: Hire Employees
If you intend to operate a standard business in the United Kingdom, you would need a workforce. You must hire people that are qualified, honest, customer-centric, and ready to work to help you build a prosperous business. Please be informed that employment law in the UK is strict and well set up to protect both businesses and employees and you are mandated to pay each employee at least the minimum wage.
The maximum number of hours anyone can work for an employer in a week in the UK is 48 hours, except if the employee agrees to work overtime and they will be paid for it. You cannot unfairly discriminate by race, gender, disability, or any other factor regarding recruitment, pay, promotion, access to training, or termination.
Step Thirteen: Open Your Doors and Start Welcoming Customers
You cannot generate sales from your products or services if you do not open your door for business. In essence, the last step to take on your quest to start a business in the United Kingdom is to ensure that you open your door for business; launch out with a bang to attract people in your neighborhood who are your first target market.
There you have it; some of the most important steps you are expected to follow if you want to launch your business in the United Kingdom as an international student.