Where to register a new business, UK, US or Canada or Ireland

[TaraCauc]

Looking for some advice, or a point in the direction of what to read to get started.

I'm currently employed in a senior role in marketing, but would like to start a small business in cosmetics in the new year. I've worked with a chemist to develop a new hair product. I would like to sell this product via our website and through Amazon, perhaps a few other online retailers as well.

I expect most of the customers will be in the US.

I have found two manufacturers who can produce this product. One in the US and one in the UK.

I am thinking it would be best to have the product produced in the US and have most of the sales dropship from amazon. Would this be the best idea?


If so where would the most ideal place set up the business be?

In the UK where I live now?
In the US where the product would be manufactured
I also have Canadian and Irish citizenship and plan on moving back to toronto next year.

Any guidance would be great.

TIA

 

[TODonnell]

I would focus on the money.

- Who will be paying you?
- Where are they based?
- Where are you selling to?
- Where is the money coming from (jurisidisction)?
- Where do I want the money to go to?
- What are the local corporate taxes?

You can set up anywhere but a trustworthy bank may not give you a business account if they don't like your legal setup.

Maybe ask a banker or an accountant who's set up these sort of things before.

My 2p.

 

[Maple Sourcing]

If you plan to move back to Canada, I'd suggest you setup your company in Canada. It's easy for a Canadian company to sell in USA.

 

[Highland Spring]

Yes - think long term - it will be a problem to prepare and file accounts if you are not in the country of residence, I am think of signing accounts / posting / meeting your accountant etc. I would wait until you move though, if it is only a year away hang on, you can always trade as a sole trader meanwhile.

 

[Mr D]

Just remember the requirements to be able to sell your products and even the labelling required will be different in different parts of the world.
You could end up with different bottles for US and EU. With maybe at some point different again for UK.

 

[UACU]

If you are planning to open a business in the uk then you need to contact with company house

 

[Highland Spring]

Go to companies house direct they charge £15 only.

 

[Page]

Well you can and might need to set up a legal presence in all the places you are selling

As always in business it all depends

So if you are selling a very small lightweight product for high value - think as an exaggeration a £500 credit card sized item
Then the daftness of the way it works is that if you post it abroad it is an export and so in UK terms not subject to VAT
I do not know the tax laws of the USA but they might be the same
In which case you are better in both cases to be exporting the product and send from the USA to the UK and from the UK to the USA

But then if it is a cheaper and bulkier product and with delivery speed as the essence then you want to be shipping UK to UK and USA to USA etc

What you should bear in mind is that the USA market is massive compared with the UK
But the UK gives you simple access to the EU - er but Brexit

Enjoy

 

[strikingedge]

USA is going to be the biggest market for you, so makes sense to base the manufacturing there.

On a purely psychological basis, if you base yourself in the UK, you're going to try and develop your local market first, which would be a mistake, because you won't grow as fast as if you focus solely on the US market.

The FDA is fairly hot on checking imports of cosmetics, but locally produced ones fly under the radar.

You don't have to pay import duties on cosmetics to the USA and as you don't have a tax nexus in any US states, you wouldn't have to pay any state taxes (although if you are using Amazon FBA you may end up having to pay state taxes as you get bigger due to the location of their DCs).

However, it is still easier to ship domestically than internationally, especially if you are new to this.

If you plan to sell products in the UK / Europe you need to be compliant with the EU Cosmetics Directive. If you sell in Canada, you need to register with Health Canada and have someone local to sign off. For USA, you need to do VCRP - the V stands for voluntary, but the FDA uses it.

As to where you set-up your company, you're best bet is to do it in the UK while you are in the UK - to get bank accounts, PayPal and other services set-up easily. There's no reason why you need a USA company if you are based in the UK, even if manufacturing is in the US.

Just because you start in the UK, doesn't mean you can't set-up branches or subsidiaries in other countries if you want to. You can set-up new companies as you move and it is straightforward to close down a UK company if you no longer need it.

 

[Chris Ashdown]

Postage costs can be the killer, UK to USA is expensive, Canada to USA ?

Amazon all your eggs in one basket = bad idea long term

 

[strikingedge]

Postage costs from UK to USA don't necessarily have to kill you.

You need a decent contract with a courier - if you're sending small, high value goods, then you can use the FedEx Envelope (up to 400g) or FedEx Pak (up to 2KG) fixed price options, which should cost you £10-15 per shipment.

When you're shipping to the USA, you're not charging VAT. If you set a fixed USA price that matches your UK price (including VAT), then on a £50 order, you've got £10 that would normally go in VAT to put towards the postage cost.

Customers HATE paying delivery charges, especially on low value (circa £50) purchases. However, the price is the price, so rather than charge delivery, you'd be better off increasing RRPs to include delivery and providing free next day delivery to continental USA from the UK.

If your items are heavy / bulky and low value, I wouldn't try and ship anything yourself! You're much better off outsourcing that to Amazon (or changing your business model!). As well as delivering items bought on Amazon via FBA, they can also ship on your behalf any orders placed on your own website.

 

[jamesandjanie]

I would say Canada is a place to be if you plan to go back there next year. The product is manufactured in the USA so you can sell for both Canadian and the US market.

 

[strikingedge]

You need a Canadian resident as one of your directors to establish a company there.

Next year is a year away! Until then you'd be running a Canadian company from the UK, with all the associated hassles of trying to get a bank account as a non-resident.

There's no reason you can't do both - set-up in the UK, establish a branch or a subsidiary in Canada (if you need it) and if you no longer need the UK company when you move over, close it down.

 

[Gecko001]

If you are planning to open a business in the uk then you need to contact with company house

To be pedantic, in the UK that is only required if you set up a Ltd or Unlimited company. If you are a sole trader business you do not need to contact Company House or register the business.

In the Republic of Ireland, you have to register all businesses as far as I know. I am not sure of what the situation is in Canada or the USA