Modern accounting technology, such as cloud accounting software, makes it possible to access the financial control room of a business from anywhere in the world. This makes operating a business from overseas more than possible, along with managing its finances.
Keith Tully of Real Business Rescue runs through overseeing company finances while residing abroad and directorial duties concerning company liabilities and that to HMRC.
Taking the leap abroad
Choosing to maintain business operations in the UK with a view to preserve a loyal customer base and continue with a business model that has already proven successful may be your preferred route, rather than starting afresh and building a client base from the ground up. If a degree of separation between your personal and professional roots is what you prefer, approaching this tactically and separating your place of work and leisure, in this case – country, can help prevent both from merging.
Operating a business in the UK can be beneficial for a host of reasons, logistically, financially, and legally, making it an appealing place to run a business, despite your move abroad.
According to House of Commons migration statistics, there were around 994,000 British nationals living in other EU countries in 2019, which is considerably less than in previous years due to the Covid-19 pandemic. As the pandemic came to an end, 560,000 people emigrated from the UK in the year ending June 2022. This shows that there's a substantial appetite for individuals to move abroad, which is no wonder as the cost of living soars, along with energy prices and inflation.
Managing the financial health of a business from abroad
Managing the finances of your business from abroad remains the same as managing your finances if you were residing in this country. Here are the key factors that you'll need to take into consideration:
Opening a bank account - You may find that some banking providers require UK residency documentation to open an account. However, there are plenty of providers that have more relaxed eligibility requirements. As a resident abroad, additional security and money laundering checks will likely be performed.
Appointing a financial manager – The role of a financial manager entails overseeing and maintaining the financial health of a business and fulfilling day-to-day obligations, such as financial planning, budgeting, forecasting, and reporting. The financial manager will be required to work in tandem with the wider team to help fulfil both short-term and long-term goals.
According to the Companies Act 2006, every company must keep adequate accounting records which means records that are sufficient:
(a) to show and explain the company's transactions,
(b) to disclose with reasonable accuracy, at any time, the financial position of the company at that time, and
(c) to enable the directors to ensure that any accounts required to be prepared to comply with the requirements of this Act.
While the above duties lie with the company director, a financial manager may be employed to ensure that these duties are fulfilled. If a company fails to comply, this will be classed as an offence and may be punishable.
Keeping on top of payments – Your obligations to creditors will remain the same, such as payment terms, so keep on top of payments to prevent exposing your business to legal action from creditors, such as a winding up petition forcing your business to close if you fail to pay. Your tax obligations to HMRC will continue, although you may find that there are tax, national insurance and salary differences which will be determined by where you carry out work or deliver a service.
Building a relationship with a UK accountant – While it's possible to have an overseas accountant managing your company finances, providing that they have the suitable systems in place, continuing with your UK accountant may be the best solution as they will be fully versed with the UK tax system, and any upcoming changes to legislative measures likely to affect your business, such as Making Tax Digital.
Making Tax Digital is an incoming governmental Tax Administration Strategy that requires businesses to:
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keep digital records
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use software that works with Making Tax Digital
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submit updates every quarter, bringing the tax system closer to real-time
A UK accountant will be well positioned to advise on the latest tax happenings to ensure that your business remains compliant, such as Making Tax Digital.
It's easy for a UK accountant to maintain the same high-quality service, regardless of location, thanks to shared accounting dashboards that can be accessed from anywhere in the world. Handling company finances while residing abroad is easy, providing that you have the right professionals and systems in place to support you.
