Deciding to set up as self-employed can be a very exciting yet daunting time. Whilst you’re probably eager to crack on with your new business, there are a few things you’ll need to do first to get yourself up and running properly.
So your tax can be collected correctly by HMRC, if you’re self-employed you need to register with HMRC. However, it’s a common mistake that people don’t realise that they probably should be registered as self-employed, meaning they could get in trouble with the tax man.
If you’re not sure, here’s a short criteria that would indicate whether or not you should be registered as self-employed;
- If you run your own business
- Have multiple customers at the same time
- If you decide on how, when and where you work
- If you have hired staff (or have the ability to do so)
- If you sell goods or services to make a profit (this doesn’t include selling your unwanted items on the likes of eBay every once in a while!)
If you meet the criteria above, you should probably think about registering yourself as self-employed.
When should you register as Self-Employed?
You should try and register yourself as soon as possible, and this must be done by 5th October after the end of the tax year of which you became self-employed, otherwise you could find yourself with a rather hefty tax bill.
How to register yourself as Self-Employed with HMRC
This part is fairly straightforward. You begin by heading to the Governments online registration portal, and you type in your email address.
You will then be prompted to complete the registration process. You will be required to provide the following information so make sure you have it at hand to make the process go as smoothly as possible:
- The date you started your business
- Personal details such as National Insurance number, home address, contact information etc
- Information about the work you do
Once registered, within 10 days you should receive a letter in the post that will have your HMRC 10 digit Unique Taxpayer Number (UTR). You will use this to log into your Government account which HMRC will also set up for you.
Name your business.
You may have already thought of a name for your business, just make sure to double check that there aren’t any existing businesses with the same name, as this will help to avoid confusion and will also help to avoid any copyright issues. However it is possible to simply trade under your own name if that’s what you’d rather do.
Do you need to register as a Sole Trader?
Not all self-employed people are sole traders, however if you work entirely for yourself and on your own, this means you most likely are a sole trader and you should register as one.
Another option is to register as a Partner if you are in a business partnership with someone else.
Things you need to make sure you do once you’re officially registered as Self-Employed
- Keep accurate records, especially anything financial.
- Keep hold of any correspondence from HMRC as this will help you complete your tax return smoothly
- File your Self-Assessment online by 31st January EVERY year. You can do this here.
- Register for VAT if your annual turnover reaches £85,000 (this is when it goes above the VAT threshold) However you may choose to do this before you reach this level of income, but this is dependent on individual circumstances.
- On 31st January and 31st July you will be required to make payments to HRMC. This will be income tax and NICs.
For further information on registering as self-employed, or for anything else that you may need help with once you’re all set up, our team of experts are more than happy to help. Get in touch with us at firstname.lastname@example.org.