Going self-employed can be a daunting task and can leave people a little confused as to what they have to do to get started. We have complied a short list of things you need to do to prepare yourself for being your own boss.
Starting up as a sole trader
If you’ve made the decision to become a sole trader in the UK, here’s a list of some of the things you need to do:
- Tell HMRC that you are now self-employed. This is so the government is aware that you pay taxes through self-assessment and pay class 2 and 4 National Insurance contributions. To register, go to the website: https://www.gov.uk/log-in-file-self-assessment-tax-return/register-if-youre-self-employed
- Carefully weigh up your banking options. When deciding which bank to use for your business account make sure you take your time and find the bank which is right for you. We suggest that you shop around and speak to them directly to find the right deal for your business.
- Make sure you have effective bookkeeping records in place, showing evidence of your business transactions and expenses. This will make it easier when completing your HMRC tax return. If you aren’t confident with these aspects of the business and can afford it, considering using the services of an accountants that you can trust and will work with you to improve your business.
- If you are working from home you will have to check your mortgage or tenancy agreement to ensure that you are not breaking any terms of the contract. In certain cases, you may have to notify and negotiate with your landlord/money lender.
- Get insured. To make sure you are covered for any mishaps your business may encounter the main types of insurance you will want to consider is Professional indemnity insurance and public liability insurance. If you have an employee, you will be legally obliged to get employers’ liability insurance in most cases.
- Don’t forget your pension. When self-employed, your pension becomes your own responsibility so look towards setting up your own private pension to cover you when you retire. You will no longer be eligible for employer contributions, but the government will input in the form of tax relief.