It is said that 90 per cent of all day traders fail within their first year of trading; mainly due to the fact they had no logical trading plan. Forex trading requires discipline, risk management and patience. That same trading discipline is required when it comes to managing your finances too.
From day one you will need to decide whether to register as a sole trader or a limited company to record your annual profits/losses. Some people who choose to start out as a Forex trader may consider registering as self-employed, declaring their profits/losses as trading income and losses, while some will declare their profits/losses as capital gains/losses.
By registering through a limited company, your trading profits will be taxed at the small companies' rate of corporation tax. Any money you draw as salary must then be subjected to national insurance contributions via a PAYE scheme, as you will therefore be an employee or director of the company.
It's a good idea to register a limited company for your Forex business if you envisage your business taking on additional traders who will therefore be drawing on a salary from the company's profits each month.
FX Brokerage Licensing and Registration
If you are considering a new venture into Forex trading, a key consideration must be ensuring that the necessary criteria are met for a licence to be granted. Usually any business which acts as a Forex brokerage, rather than trading directly on the Forex market using their own monies, requires some form of licensing. If you need an assistance with a Forex company registrations in UK, you can also speak to our business advisors between 9.30am-6.00pm Monday to Friday by telephoning + (0) 207.935.5171 or + (0) 330.808.0089 (national rates).
Form a Company for the Forex Activity: Can I Incorporate a Company in the UK and Run a Forex Business?
If you want to set up a foreign exchange business in the UK, you'll need to start by establishing a company as the legal basis to run it from. Here at Ukincorp, we can help you get your company registered – a limited liability partnership (LLP) is one option - quickly and affordable.
You can simply use our online application form to give us all the details we'll need to register your company, and once we have them, we'll start the process with Companies House, the UK registrar of firms. We have a number of pre-formation services, such as providing nominee personnel and a registered office address, that you may wish to use.
Once your company is formed, we'll provide you with legal documentation to prove its existence, including the memorandum and articles of association. You can then go ahead and take the next steps towards establishing your Forex business, and we can assist you along the way.
Before you can run your Forex operation, you'll need to register with HM Revenue & Customs, and they will conduct what's known as a fit and proper test on you to determine if you're eligible to run such an enterprise. This test is essentially to do with Money Laundering Regulations and is relatively straightforward - but if you have previously been declared bankrupt or committed various offences for which you were convicted, you won't pass.
Next, you'll need to get approval from the Financial Services Authority, and if you just register as a "small payment institution" it's fairly easy. Among the requirements for approval are that the firm is based in the UK and has been registered with HMRC for money laundering. The FSA will carry out a number of checks on you, including to determine if you've committed any offences, before granting approval.
How to Become a Foreign Currency Dealer
The responsibilities which any Forex trader, licensed or unlicensed, may have depends on a number of variables, including the source of the trading funds, the chain of responsibility and the terms of any relevant insurances. Like any other business, a Forex trader is also bound by the law where their business is incorporated, in particular as it relates to tax payment, financial reporting and incorporation. Licensing can sometimes bring an additional layer of bureaucracy, but not inevitably so.
Establish a Company for the Forex Activity: Do I Need to Get a License to Start a Forex Business?
Forex trading is, at its most basic, simply buying currency at a low price and then, hopefully trading it for a higher price in order to make a profit. Many people are drawn to Forex trading by the possibilities of swift wealth accumulation as well as the ease with which trading can be commenced. There is often considerable confusion about when Forex businesses require a licence and when they can trade without one. Take a look at circumstances where licensing is important and where it can be avoided
Who is your audience?
If you're simply trading using your own monies and aren't investing resources belonging to other people or agencies, then there is no need to be licensed. Ukincorp Ltd can give you information regarding everything you need to do to get your company registered, incorporated and operational, either abroad or in the UK. Once your organisation has been legally constituted, you can trade as and when you wish with your own resources.
Foreign incorporation: if you base your business outside the UK, for example in Belize or Panama, then you can invest using money from other people, provided you adhere to the rules of the country where your company is registered. Many offshore locations do not require brokers to be licensed in order to work. Ukincorp Ltd can advise on those countries which might best suit your needs for a corporate base, as well as help with all the necessary paperwork.
UK trading: whilst you do normally need a license if you're intending to offer a brokerage service to UK customers and are UK based, you can still legally trade in the UK and offer brokerage services without a license in some circumstances. Ukincorp Ltd have a significant track record in providing specialist advice on all aspects of Forex trading start-up and can give you further information.
Legal Requirements to Obtain a License for Your Forex Business
If you are considering a new venture into Forex trading, a key consideration must be ensuring that the necessary criteria are met for a licence to be granted. Usually any business which acts as a Forex brokerage, rather than trading directly on the Forex market using their own monies, requires some form of licensing. Take a look at the key requirements which are almost invariably needed in order for a license to be obtained.
An incorporated company: before a company can start to trade, either as a brokerage or directly on the Forex market, it is essential that it is legally formed and incorporated. This involves the production of a memorandum and articles of association, as well as the appointment of individuals to fulfil key roles (for example directors and a nominee). Incorporation need not be undertaken solely in the UK; Ukincorp Ltd can assist with all aspects of incorporation for companies located in offshore locations such as Belize, Saint Vincent, or Panama as well as British-based enterprises.
A bank account: it's obviously impossible to trade on the Forex market without an appropriate bank account. Not only does the account need to be suitable for an international finance operation, it also has to be appropriate for the country where your company is incorporated and suitable for the nature of your activities. Not only can Ukincorp Ltd provide recommendations on the most appropriate account, they can also undertake all the administrative work necessary to get your bank account up and running promptly, even when it's an overseas one.
Transparency, accountability and administration: no matter where you apply for a license, it makes good business sense to ensure that you have robust financial systems in place and appropriate record keeping to chart transactions. Ukincorp Ltd can undertake all this work for you, as well as provide timely financial reporting and assistance with tax matters.
Do I Need a License From the FSA for My Forex Business?
In the wake of the UK banking crisis, there has been considerable attention given to tightening up the rules which govern financial institutions that offer their products to the public. The Financial Services Authority keeps a publicly accessible directory of registered traders and related businesses. These have satisfied the FSA's rigorous standards for financial reporting, fiscal propriety and sound customer care; many potential investors check whether a trader is FSA registered before deciding to do business with them. That said, it's not essential for a trader to be registered; take a look at how traders can still operate legally without FSA registration.
No outside investors: if your business has been set up solely as a trading vehicle for your own funds and assets, then clearly if you're prepared to put up with any losses you make then there's no need for licensing. A key benefit of FSA registration is that funds are covered by FSA insurance, but if you're content to forego that benefit then it's perfectly legal to trade. Ukincorp Ltd can advise on the best corporate structure to adopt if this is your preference.
Foreign investment: whilst a UK audience is often keen to invest with an FSA registered business, there are a large number of investors outside the UK who don't see FSA registration as a priority, If your operations are largely focused on an international market, it could well be the case that FSA registration just isn't necessary for your aims and objectives to be met.
Foreign incorporation and registration: obviously a trading business which is registered outside the UK does not need to comply with FSA requirements. Ukincorp Ltd are experts in setting up international businesses in several popular offshore destinations, including Panama and Belize. Opting to operate outside the UK can allow effective trading without the need to for FSA or European registration.
What are My Responsibilities if I Run an Unlicensed Forex Business?
The responsibilities which any Forex trader, licensed or unlicensed, may have depends on a number of variables, including the source of the trading funds, the chain of responsibility and the terms of any relevant insurances. Like any other business, a Forex trader is also bound by the law where their business is incorporated, in particular as it relates to tax payment, financial reporting and incorporation. Licensing can sometimes bring an additional layer of bureaucracy, but not inevitably so. Discover below why being unlicensed can result in just as much paperwork as becoming a licensed trader.
Every business generates paperwork: even if you're not investing other people's money and don't see the need to become a licensed Forex trader, it's still necessary for your business to be legally registered in its country of operation. This involves a considerable amount of specialist paperwork, which is why many entrepreneurs use Ukincorp Ltd to facilitate their business start-up. Ukincorp works rapidly, ensuring that all the correct approvals, registrations and documentation is completed in a timely manner.
Insurance considerations: many traders protect themselves against unexpected loss through insurance. Almost inevitably a suitable policy will stipulate the necessity for appropriate records relating to transactions to be kept up to date. In addition, should the business be queried by a tax authority, it's important that accurate, up to date financial information is on hand to clarify what the tax position might be.
Business credentials: whilst many international traders may be fairly ambivalent about UK licensing, they may well want to see evidence that the company with whom they're about to do business with is fit for purpose. Ukincorp Ltd can quickly put in place robust financial management systems, comprehensive reporting mechanisms and provide plenty of suitable documentation which will demonstrate the high calibre of your organisation.
What Information Do I Need to Provide to My Customers If I Offer Forex Facilities?
A good forex brokerage is much more than a place for customers to deposit their funds, make some trades and hope for a good return on investment. The Forex brokerage market is extremely competitive, so it's a good idea to have the ability to provide your customers with as much information and tools as possible. At Ukincorp Ltd, we understand what separates the good forex brokers from the great ones.
World-beating customer service goes a long way: try to be as approachable as possible through all channels - on the phone, via online chat or in person, if at all possible. As far as money is concerned, your customers will want to be able to get in contact at all hours of the day for reassurance and advice regarding their investments. Get your customer service right and you're on the right track.
Registering your company LLP means your customers can trust you: a certificate of incorporation sends a message to your prospective customers that you're a company they can trust. With Ukincorp Ltd, registering a company in the UK or overseas could not be simpler – when registering, you'll also receive a tailor-made memorandum, articles of association and an optional corporate bank account with one of the UK's largest financial institutions.
Offer expert advice: experience in the Forex markets is crucial. If you can provide your customers with well-informed information and advice at no extra charge, chances are they'll spread the word about how good your business is.
Provide technical analysis: your traders will expect to be provided with all the tools, charts and graphs they need in order to analyse the performance of their investments. More features are always better when it comes to market analysis, so be sure to offer detailed trading statistics.
Keep your customers up-to-date: Offering up-to-date news and reports on your Forex brokerage site will provide your customers with the confidence that you've got your finger on the pulse of the markets. Try linking feeds from larger brokerages.
What About My Annual Obligations to the FSA If I Own a Forex Business?
If you are a Forex trader that has a UK audience, FSA registration is extremely useful. The FSA (Financial Services Authority) sets standards for the conduct of financial institutions; these standards ensure financial products are sold in a transparent fashion. Unfortunately, for traders, registration requires meeting detailed reporting requirements, which can take a considerable amount of time and energy.
Financial reporting: in addition to ensuring that client funds are kept in a separate bank account, FSA registered brokers also need to use a bank that has appropriate insurances and safeguards in place to provide a high level of protection to client money. The Forex trader is also required to submit regular financial reports, an annual audit and other information as and when required to the FSA in order to retain their registration.
Dealing with the paperwork: provided trading is being undertaken in a legitimate manner and clear records are kept of each transaction, the production of regular financial reports will be straight-forward. Ukincorp Ltd can provide expert assistance in ensuring that suitable information collection systems, checks and balances are put in place, maximising your chances of satisfying the FSA.
Reporting is easy with Ukincorp Ltd: rather than spend hours totting up columns or double checking transactions, why not let Ukincorp Ltd get the job done? With extensive experience in the production of high quality, relevant and timely reports, audits and financial data, Ukincorp Ltd also have the right skills to successfully undertake the day-to-day record keeping that is essential to FSA registered traders.
Can Ukincorp Help Me to Register a Company or an LLP to Start a Forex Business?
In the information age, each and every one of us now possesses the ability to launch an online business with the potential to capture an international customer base in next to no time at all – essentially, a good idea can yield potentially limitless returns within a matter of months, or even weeks. One particular industry which has continued to witness exponential growth on an unprecedented scale in recent years is foreign exchange brokerage, commonly referred to as the Forex market.
Forex brokers typically connect individuals wishing to trade on foreign currencies with the Forex market, providing an easily accessible platform for customers to trade on what is known as the "interbank", which is essentially an easy way of describing the manner in which international banks trade with one another at prices which vary from institution to institution.
Of course, there are numerous complex legal practicalities one has to take into account before setting up as a Forex broker, including company registration. Without the expertise required to register a company, you could be missing out on any number of potential benefits and rewards associated with forming a corporation or limited liability partnership (commonly abbreviated as LLP).
Ukincorp Ltd offers a range of affordable UK company formation and registration options, allowing aspiring Forex brokers to maximise their potential, with guidance on what sort of registration will help to best maximise profits on the global Forex market.
By choosing Ukincorp Ltd to facilitate your company or LLP formation, you'll get a certificate of incorporation, a memorandum and articles of association bespoke tailored to your business, and an optional corporate bank account with one of the UK's leading financial institutions. What's more, you'll receive expert advice on the best ways to use taxation benefits to make the best of your assets.