Set up and register as self-employed

Setting up as a self-employed sole trader is the simplest and quickest way to start a business. There isn’t much paperwork to do. There are no registration fees to pay, but you must register with HM Revenue & Customs for tax and National Insurance purposes. Record keeping and accounting is straightforward, and there are the benefits of being your own boss.

Self-employment: Why do it? Why become self-employed?

In some sectors, such as the media, the Bar and the creative and performing arts, self-employment is a standard way of working. For others, it is a lifestyle choice, achievable by:

• setting up a business, either on a full-time basis or alongside a part-time job;
• working as a freelancer or contractor;
• buying into a franchise.
• Whatever your choice, there are pros and cons.

The benefits

• Earn more money. Self-employed people generate their own income and profits.
• Freedom to do projects that you enjoy, move in different directions and take new approaches.
• Use a particular talent such as a technical aptitude or creative skill.
• Be your own boss.
• Choose your hours of work.
• Take charge of your future. Working for someone else makes you vulnerable to redundancy, closures or mergers.
• Work from home or operate out of your own separate premises or move around different locations as a contractor.
• Free yourself from the stresses of the conventional workplace – office politics, targets, meetings and constant demands.
• Live off your wits and your own efforts rather than depending on an employer.
• Receive extra tax benefits.

The risks

• You cannot guarantee a large salary or income of any kind! Competition, economic fluctuations, and changing tastes can all affect this.
• When you start out, you may not be making much money or it may not be arriving at a predictable rate.
• You must earn enough to live, so you might need to support yourself in another way while seeing your idea take off.
• Working on your own means you are responsible for the day-to-day running of the business. This may mean doing tasks that you dislike.
• You need a product for which there is a demand. This might depend on having a certain image, technique or product.
• The buck stops with you! Taking an unwise decision could dent your income.
• Expanding too rapidly or conversely not being quick to seize a chance, might be detrimental.
• Your hours will often be dictated by your customers and clients. You have to respond to their needs or forfeit money and good will.
• Working from home is most effective when you have the space and facilities to do so.

If you work out of other premises, you will have to pay rent and other overheads.

• It’s impossible to escape some pressure, especially the kind coming from clients and customers.
• By not being employed you are potentially losing a range of benefits and a support infrastructure, such as computer help.
• Setbacks may impact on your confidence and profits. Be realistic, learn from difficulties and make contingency plans.
• To obtain tax benefits, you usually need to pay out money first. You’ll also have to make your own pension and health insurance arrangements.

Setting up as self-employed business

Anyone can set up in business as a sole trader, although for certain types of work you may need a licence or permission from your local authority. Doctors, lawyers, IT consultants, builders, restaurant chefs, child minders, cab drivers and street traders are common professions registered as self-employed persons. Some of them need to have a local authority license. Your qualifications and business premises may be inspected beforehand to ensure you comply with regulations.

Working from home

If you run a business from home, you may have to pay business rates for the part of your home that you use for your business. This mainly depends on whether the business area of your home is also used for domestic purposes. If you simply work on a computer in a bedroom, for example, you will probably not have to pay business rates..

You may need to get planning permission to set up a business at home. For example, if your business could cause a nuisance to your neighbors, or if you intend to do any building work to adapt your home. If in doubt, contact the planning department of your local authority..

Bear in mind that there may also be restrictions in the deeds of your property or, if you rent, in the rental or lease agreement.

Choosing a name for your business

You can trade under your own name, eg M.Y.Self, or use another business name, eg Peerless Promotions.

If you decide to use a business name, you must make sure that your business stationery displays your name as well as the trading name of the business for example, M.Y.Self, trading as Peerless Promotions.

Your trading name should not be the same as, or too similar to, that of a business which already exists. Be careful that it does not contain words that people might find offensive or misleading

Registering for tax and National Insurance

When you become self-employed you must register with HM Revenue & Customs (HMRC) so that they can set up the right tax and National Insurance records for you. Once you’ve registered, HMRC will send you a Unique Taxpayer Reference number and you’ll then complete a Self Assessment tax return each year.

Even if you already complete a Self Assessment tax return, you can still complete a Self Assessment registration form to tell HMRC about your self-employment.

It’s best if you register as soon as you become self-employed.  You must register at the latest by 5 October after the end of the tax year for which you need a tax return. The tax year runs from 6 April one year to 5 April the next. So if, for example, you have tax to pay on your business profits for the 2010-11 tax year, you need to let HMRC know by 5 October 2011.

If you register late you may have to pay a penalty.

Registering for the Construction Industry Scheme

If you are a contractor and/or a sub-contractor in the construction industry, you must also register with the Construction Industry Scheme.

Registering for VAT

If you expect your business to have turnover of more than £73,000, you will need to charge VAT to your customers and pass this on to HMRC.

Registering as an employer

If you employ other people in your business you need to collect and pay income tax and NICs, which will mean operating a PAYE (Pay As You Earn) system.

HOW WE CAN HELP YOU WITH YOUR BUSNIESS START UP AND REGISTRATION

 We can advise you what you need to do, how to plan and start your new self-employed business.

We can give you professional advice on business plans, proper finance and the legal requirements that must be met when starting up a self-employed business.

This guide explains the consequences of, and the legal requirements for, setting up as a sole trader. You will find out how to meet your tax responsibilities by filling in your Self Assessment tax return each year and paying your tax and National Insurance. Finally, our checklist will help you make sure that you have put your business on a proper legal footing.

We offer our clients different advices and services:

• Before you start your new self-employed business
• Forming and naming your self-employed business
• Your self-employed business workplace
• Registering for tax and National Insurance
• Managing your business
• Help and support
• Go for growth

CONTACT US FOR AN APPOINTMENT NOW!

We can represent you at any level of your business registration application.

The first option consists of a comprehensive service including advice about the procedure, documents required, assistance with completing the form, collation of evidence and representations and how the requirements are satisfied.

The second option is for those applicants who are confident with their applications and who merely want us to double check the application form and documents to ensure everything is in order and to advise of any potential weaknesses of the application so as to minimise chances of refusal.

The detailed professional advice/a full consultation concerning your business matter can be arranged for just £60.00 (inclusive of VAT). The detailed advice can either be provided through face to face consultation in our office or over the phone. We do not provide with an advice over the phone.

To find out whether there are good prospects of success in an application, please arrange an appointment for business consultation to discuss your business start up  matter face-to-face with our consultant.

An appointment for face to face consultation or detailed consultation can be arranged by calling us our office or by simply completing sending an email request.

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