Looking to register as self-employed in the UK? Check out our quick guide below and you’ll be up and running in no time.
Firstly, it’s important to understand the terminology surrounding business registration. Take a look at this article from Simply Business, which breaks down the differences between the terms ‘Self-Employed’ and ‘Sole Trader’. In short, there is no substantial difference between being self-employed and being a sole trader. ‘Sole Trader’ is the term that describes your registered business structure, while ‘Self-Employed’ is a way of declaring that you don’t work for an employer.
It’s important to correctly register your new business and the next hurdle is deciding whether to register as a Sole Trader or a Limited Company. This guide from Simply Business breaks down the advantages and disadvantages of becoming a Sole Trader or a Limited Company. Here’s a quick overview of the pros and cons of each:
Limited Companies limit your legal liability, are often more tax efficient, and sometimes save money on taxes. The downside is that Limited Companies require more paperwork and responsibilities.
Sole Trader businesses are easy to set up, and generally require less paperwork. The disadvantages include unlimited liability and often worse tax rates.
If you decide that self-employment is the right pathway for you, check out this video guide from Small Business Toolbox on registering as self-employed in the UK.
In the video, Andy covers the three mandatory steps you need to take to become self-employed:
- Do work and get paid for it.
- Register for tax Self Assessment with the HMRC.
- Keep good accounting records of all your sales and purchases.
Once these steps are completed, there are two additional optional yet recommended steps to consider:
- Open a business bank account.
- Get business insurance to protect your business from financial losses.
Check out the full video below to hear more of Andy’s tips on registering for self-employment. Skip to 7:40 for a full step-by-step walkthrough of the online registration process.
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