Having the 5th largest economy in the world, England is one of the leading international financial centers. With its stable economy, strong currency, investment climate that encourages entrepreneurship, and proximity to the European Union and USA markets, it is one of the locations where many business people want to establish a company or open a branch. Consider taking part in the UK market to grow your company, develop strong business connections, and increase the value of your brand.
Company types in England are similar to those in Turkey. We can categorize these companies under two headings: 1) Legal Entity Trading Companies and 2) Natural Person Trading Companies. Let’s look at these types of companies in detail.
There are four types of legal entity trading companies in the UK. These are:
Public Limited Company (PLC) (Public Limited Company),
Private Limited Company (LTD)
Limited by Guarantee (CLG)
Unlimited Company (UNLTD) (Unlimited Liability Company)
Now, let’s get to know the first two most preferred company types among these company types.
It is a publicly-traded company; with this type of company, you can issue shares and bonds on the stock exchange. It is the most prestigious type of company. The responsibilities of the partners are limited to the capital they have invested. The company must have at least two shareholders, two directors, and one general secretary. The general secretary of the company must have the qualifications determined by law. It is established with a minimum capital of 50,000 GBP. 25% of its capital must have been paid at the establishment stage.
The most crucial difference between PLC company types is that LTD is not publicly traded. Its shares are not freely transferable on the stock exchange. The responsibilities of the partners are as much as the capital they have invested. It is the most preferred type of company after sole proprietorships in the UK. There is no minimum capital requirement. It can be established by a single legal person or natural person. There is no limit to the number of partnerships. At least one director must be appointed as the manager.
The main difference between the legal entity and commercial companies is that in unincorporated companies, the shareholders are unlimitedly liable for all their personal assets. No minimum capital requirement is required to establish a company in this type of company. Partnerships can be established with at least two persons or legal entities.
There are four types of the natural person trading companies in the UK. These:
Sole Trader (Sole Proprietorship),
Limited Liability Partnership
Now let’s get to know these types of companies more closely.
There are over 3 million sole proprietorships in the UK. It is the most common type of company. It is a one-person sole proprietorship. The founding person is responsible for the company’s debts with all his assets. Self-employment registration with the Revenue Service (HMRC) is sufficient. He is an income taxpayer.
It is a company established by two or more people who will do joint business for profit. The partners are responsible for the company’s debts, including their personal assets. One of the essential features of the general partnership is its partners’ joint and separate legal responsibilities. For example, if one of the partners fails to fulfill its obligations, the creditors may pursue the corporate and individual assets of the other partners. Partners must register as self-employed with the Revenue Service (HMRC). Partners personally pay income tax on their share of profits.
Two or more people install it. In this type of company, there are two separate partners, a managing partner, and a non-managing partner. The non-management partner does not interfere in the management and is only responsible for the company’s actions, limited to the capital he has invested. The managing partner is responsible for the company’s liabilities with all his assets. In addition, the partnership must be registered with Companies House. Partners file personal income tax returns. Partners personally pay income tax on their share of profits.
There must be at least two partners. Partnership, not individuals, is responsible for the company’s debts. Since its establishment is like a limited liability company, it is somewhat more complex than other partnership types. Partners must be registered with the Revenue Service (HMRC) and partnership with Companies House. Partners make a personal income tax declaration.
It would help if you decided to determine the most suitable company type by evaluating the nature of the work, the objectives of the company, the amount of capital, the shareholder structure, the level of responsibility to be undertaken, the number of employees, and managers, the estimated sales volume and tax advantages. It is possible to switch from one type of company to another as needed.
According to World Bank data, establishing a company takes at least 32 days in Europe and 13 days in England. According to the World Bank’s assessments in 2019, the UK ranks 8th out of 190 countries in terms of ease of doing business.
It is the most preferred type of companY after sole proprietorship in the UK. It corresponds to a limited company in Turkey. An LTD can also be established with a single person or legal entity. The procedures for establishing a company in the UK are simple. If all the documents are ready, you can set up your company in an average of 13 days. Partners do not need to be UK citizens or have residence permits.
The company may perform any activity that is legally permitted. There is no minimum capital requirement for establishing an LTD company. An LTD company based in the UK must have at least one director. The company’s owner in Turkey cannot be the director of the company he will open in England. In this case, either a person with a residence and work visa in the UK will be appointed as a director, or an employee of the parent company residing in Turkey will have to apply for an “investor” or “sole representative” visa.
The steps required for the establishment of the company are as follows:
Documents Required for the Registration Process:
Memorandum of Association “Company Establishment Deed”: Denotes the company’s name, registered office address, and it’s subject/what it will do.
Articles of Association “Incorporation Agreement”: It is the document that determines the company’s internal regulations.
The types of taxes that companies are liable to in the UK are:
The Double Taxation Agreement between Turkey and England has been in effect since 1988. It is basically based on the taxation of the income in the place of birth. Taxes can be paid in Turkey for personnel assigned from Turkey, depending on their working time and status.
There is no need to be a citizen or obtain a residence permit to establish a company in the UK. If the person who wants to establish a company will come to the UK and follow the establishment and post-establishment activities on-site, he must obtain an investment visa. Tourist etc. Following such transactions with visa types may cause some problems in the future. The possibility to apply for online company formation in the UK is only available to UK citizens. In addition, if the partners or founders do not have the opportunity to come to England, it is possible for experienced consultants who are British citizens residing in England to carry out their transactions by issuing a power of attorney through any notary public in Turkey.
There are three types of investment visas in the UK. If the entrepreneur has an innovative business idea, he can apply for a “start-up” visa. Apart from this, there are also two other investment visas called “innovator” or “sole representative.” To apply for the “Sole Representative” visa, you must have an A1 level of English and have less than 50% stake in the parent company.
With the UK leaving the EU after the Brexit process as of 2021, the Ankara Agreement that Turkey signed with the EU ended with the UK. For this reason, this method, which entrepreneurs in Turkey preferred to invest in England, has lost its validity.
Sometimes, entrepreneurs prefer not to establish a new company but to operate by opening a branch. Apart from the alternatives of establishing a company or opening a branch, Turkish companies may also engage in commercial activities in the UK through agency assignments, distribution agreements, partnership undertakings, or commercial agreements with companies in the UK.
No special permission is required for establishing a company with foreign capital or opening a branch or representative office of a company headquartered in another country. There is no difference between the principles that domestic and foreign companies are subject to in terms of their commercial activities. Companies with foreign capital can also work in any field where domestic capital can work. There is no domestic partner requirement for the companies to be established.
Foreign companies can open branches in the UK. The branch they will open will be subordinate to the parent company abroad. The branch structure is the same as the establishment and partnership structure of the parent company. A foreign company must register with Companies House (Chamber of Companies) by applying to the branch established by a foreign company to carry out commercial activities, together with the parent company’s information in their own country, within one month at the latest. All information submitted to the Chamber of Companies is public. The establishment and financial reporting obligations of branches are subject to fewer procedures than limited liability companies.
Foreign companies wishing to establish a permanent business in the UK can send a senior manager to the UK with an “Only Representative Visa”. The representative in question may establish a branch in the country, operate on behalf of the company in Turkey, employ personnel and engage in various sales-oriented activities, and develop various business contacts.
Branches opened in the UK are not considered a limited liability in their activities, as in limited liability companies. The director of the branch in England may be held personally liable for the company’s debts. Also, when a foreign company opens a branch in the UK, it must regularly share all the legal and financial information of the outside parent company with Companies House. Another issue is that since the branch of the foreign company in England is opened up as a permanently established business in England, it is obliged to pay corporate tax due to branch income. For these reasons, it is more preferable to open a limited liability company instead of opening a branch.
If a foreign company regularly conducts its business from a certain location in the UK, but is not established as a limited company and its activities are not sufficient to be defined as a branch, it must register with Companies House as a Place of Business. It is necessary to notify Companies House within one month at the latest when the workplace starts operating. The operation of a warehouse or the appointment of a Sole Representative can be given as examples of this situation.
Incentive programs in England are given depending on the conditions, such as the employment that the investment will bring and the contribution it will provide to the development and the development of the information technology infrastructure. There are many incentive packages such as incentives for new companies, tax advantages for SME-type companies, incentives for start-ups, and incentives for research and development activities. Since the incentive programs are comprehensive, we recommend making the necessary examinations and applications through an investment consultant in line with your business plans.
First, you need to create a business plan. Before starting a business plan, visiting Germany and making business contacts and connections with a local partner is extremely important. Again, starting with the support of a consultancy company that knows the German market well will be the lowest cost strategy and will provide you with investment consultancy and market research services.
We recommend that you create your vision and at least a 3-year strategy plan within the framework of the business plan. Within this strategy plan, it is crucial to determine the sector and business in which you will operate, clarify your goals and objectives, and draw up your investment budget.
The next step after research and planning is to take action. The strategy with the lowest risk and cost in a foreign market is to advance through partners or consultants who know the German market well.
Opening an office in Cologne, MHR & Partners established local partnerships in Germany, the Netherlands, England, and Belgium as part of its strategy to become a global company. With the help of these partners, we offer end-to-end turnkey solutions and consultancy services for you to establish a business from scratch safely and quickly and manage all the processes you may need after the establishment.
You can contact Sworn-in Certified Public Accountant Mehmet Akif Özmen directly (+90 542 830 3408 or firstname.lastname@example.org) to set up a business in Germany.
As MHR & Partners, we are directly and indirectly active in more than 20 countries worldwide. We aim to operate with 10 branches in 100 countries in 10 years. We offer you end-to-end consultancy and support services in establishing a company, obtaining a residence permit, and in all operational processes abroad, primarily financial issues.
Our priority is to provide consultancy services to companies with a growth vision and business strategy abroad. We attach particular importance to the uninterrupted continuation of our services with the assurance of MHR & Partners (Mühür YMM AŞ) after the company establishment stages. Our core mission is to be a safe harbor and provide sustainable services.
We want to be a bridge to our customers’ business plans for growth and development, even in the most remote parts of the world.
To establish a business in England, you can contact Sworn-in Certified Public Accountant Mehmet Akif Özmen directly (+90 542 830 3408 or email@example.com). If you wish, you can reserve a meeting by filling out the form below.
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