If you're thinking of setting up shop in London, you'll be in good company – the American business community in the Big Smoke has tripled since 1999. The size, maturity and openness of the market is one of the city's (and country's) biggest draws -- and at the same time, a serious drawback. If you plan on setting up shop in the United Kingdom, you should know that you'll face serious competition.
These days, London holds particular appeal for green companies: The United Kingdom's Climate Change law is the world's first to legally mandate a 26 percent reduction in greenhouse gas emissions by 2020 and 80 percent by 2050. Low-carbon targets are also driving demand for renewable energy, low carbon, and green technologies.
And of course, London will host the 2012 Olympic Games, which promises a stack of infrastructure projects, among other growth. Some 7,000 direct contracts are available to businesses as part of the project (safety and security equipment are in particular demand), which organizers estimate will create supply chains of around 75,000 opportunities. For details, visit the London 2012 Business Network.
Here are some tips for making the Transatlantic leap.
1. First, call in the lawyers – in this case, solicitors. (Barristers, the other type of lawyer, are the ones who argue in court.) There are six legal ways to set up a company in the United Kingdom, each with its own tax and other implications. No matter which you choose, you'll be filing documents from Companies House. (For more information, click here.) Another useful reason to hire a solicitor? Besides all the legal advice, you can also ask to use his or her office address on your documents so the processing of your business registration isn't delayed. (You can change the office address once you have your own.) For help finding a solicitor, click here. Another useful port of call: ThinkLondon, a nonprofit which promotes the city for business and investment. The organization can offer free advice on business registration and the practicalities of set-up, as well as visa guidance and office location help. And yes, they can also help you find a solicitor.
2. Speaking of taxes, the tax year in England runs from April 6 to April 5. On arriving in the London, you're required to submit a P86 – also known as an arrival questionnaire – to Inland Revenue, which will use it to determine how you should be taxed. Hint: Call the solicitor before you file it. (For help, click here.)
3. To open an office in the United Kingdom, Americans need a business visa. Entering the country on a six-month tourist visa – which is granted free and almost automatically to U.S. citizens at the airport – is not recommended. It may seem like the easiest route if you're planning to employ Brits to run the office once you have it up and running, but it may cause problems if you need visas in the future. You may want to consult an immigration lawyer.
Which type of visa? The Home Office website is extensive but confusing. "It's like going into a sweet shop – there are so many different categories," says Margaret Burton, Deloitte's director of Global Employer Services. "It's all there but it can take some work finding it."
Most British business visas are granted on a points-based system that takes into account education, previous earnings, age and U.K. experience. The entrepreneur visa seems the most logical, but there's one seriously stiff requirement: £200,000 (about $300,000) in the bank. Later, you'll need to show that the business was registered within three months of your entry to the United Kingdom, and has created two full-time positions for at least 12 months. For more details, click here.
To escape the funds requirement, there are two other visas you may want to use: sole representative or highly-skilled migrant. The sole representative visa requires that the applicant be a senior manager sent from the head office. The highly-skilled migrant visa doesn't actually require any company affiliation at all – only that the person be able to support themselves in the United Kingdom.
For any type of visa (except tourist) you'll need to go in person to supply the Home Office with biometric data: a digital photograph and fingerprints. Luckily, you don't have to trek to the embassy or even the nearest consulate for this – the British government has contracted with a visa services company called Worldbridge that has some 130 visa centers throughout the US. Click here for more information. The company cannot advise you about your application – it can only process it. The U.K. processes most visas within 3 weeks, but some can take as long as 12 weeks.
4. Opening a business bank account in Britain is harder than you think. All company directors are required by law to be present at the bank on the appointed date, plus there is a raft of documents to submit, including a U.K. Certificate of Incorporation and a Certificate of Good Standing, both of which have their own waiting periods to acquire. (For more information, click here.) A letter of introduction from your American bank, particularly if you have a long history with them, may be helpful.
5. Office space in London is the second most expensive in the world, according to a Cushman & Wakefield survey released in February. In London's prime West End, rents are about £75 ($114 at press time) per square foot, and in the City of London (the city's financial heart), they're about £44 ($67) per square foot. If the thought of paying rent in London isn't leaving much breathing space on the balance sheet, you may want to consider serviced offices.
Kate Nudds, founder of Professional Choice Personnel, recently moved to a serviced office to save cash. "As the climate unfolded, we had to make cuts. Now we don't have to pay rates or broadband and all the heating and lighting is provided," Nudds says. "I would say we've saved around £200 ($304) a month on bills and rates, and as they provide a front receptionist who takes all our calls, we've also saved another £12,000 ($18,192) employing someone." What's more, the space is nicer than the company could have afforded on its own. "It looks fantastic and has raised the corporate image of our company when we also bring clients on site," she says.
Another option: "Touchdown London," the city's effort to declare London open for business. The program provides free desk space for up to a year in one of its centers. Qualifying businesses also can receive a 25 percent discount on rent at one of Avanta's serviced office spaces. For more details, click here.
Then, of course, is to go virtual. (For Inc.'s own virtual experiment, click here.) If you need to have semi-regular business meetings, various private members clubs (including some designed for entrepreneurs) offer space. For details on clubs, click here.
If you're still set on your own office space, the suburbs are sometimes a cheaper option – though they are "a mixed bag and difficult to generalize," says James Merrett, who specializes in London retail for Cushman & Wakefield. (Desirable outer-London locations such as leafy Chiswick or Wimbledon Village can cost nearly as much as central London.) One place to consider: Stratford, at the heart of London's 2012 Olympic venues. The up-and-coming area is home to a new town center complete with high rise office towers dubbed "Stratford City," and plans call for an international train station, that will link the neighborhood to the high-speed Eurostar, and provide easy access to Paris and Brussels.
If you're renting you may want to consider a license agreement, which lasts for up to a year, as opposed to the more traditional commercial lease, which lasts from three to 25 years. Pros of a license: It's more flexible and usually can be ended at short notice from either side. Cons: You don't have an automatic right to renew it.
6. Don't underestimate how much time (and money) you'll need to budget for transportation. Links between northeast and northwest London are particularly poor and tend to require either travelling all the way into central London to travel back out, or multiple buses. Your office may be close to a London Underground stop, but clients you need to visit may require a couple of subway line changes, all of which can mean journeys of an hour, especially as the Tube undergoes frequent engineering works. How bad can it be? Getting to work late because of Tube or train problems is a widely accepted fact of office life in London and merits sympathy (as opposed to reprimands) from most managers. Little wonder that the mayor prefers a bicycle. (For sample journey times, click here.) Hint: The best (and best-functioning) London Underground lines are the newer ones – the Jubilee (silver) and Bakerloo (brown) lines. The Victoria line (blue) also is good. Taxis across London can cost upwards of £100 ($151).
7. Thinking of employing Brits? To be competitive you'll need to offer approximately 23 days' vacation – and that's not including public holidays. Unlike many American companies, Brits actually use all of their vacation – two- and three- week holidays, as vacation is referred to in the U.K., are not just for, say, honeymoons. You won't, however, need to provide health insurance: British citizens are covered under the National Health Service. (If you're thinking of employing Americans, you may need to offer special coverage to stay competitive.)
8. If you want to drive in London, keep in mind that obtaining a British drivers' license can be time-consuming and you will need to take lessons (starting at about $200 for 10 sessions). It's also common to fail the test at least once. Legally, you can drive in Britain for a year on your U.S. license, though occasionally it can cause car rental headaches. If you were a claims-free customer in the U.S., come armed with a letter from your insurance company, which should help bring down the cost of car insurance.
9. You may speak the language, but people still may not understand you (and vice versa). Like any other foreign country, Britain has its own ways of doing business – and usually, it's a lot slower than in the U.S. Brits don't make decision quickly, don't necessarily see change as a good thing – and they don't tend to reveal emotion, except at football, a.k.a soccer matches, where all bets are off. They also avoid extravagant claims about products or plans.
Brits don't network as shamelessly as Americans, and pulling out your business card too early can be fatal to the relationship. At the pub, don't bring up work, even if you're with business associates. Nor should you ask a Brit the standard American conversational opener: "So where are you from?" It can appear intrusive – and since the answer is obvious to any native Brit (the accent gives it away), you've just marked yourself as a foreigner desperate for conversation.
Sound confusing? As the playwright George Bernard Shaw once said, "England and America are two countries divided by the same language."