Many self-employed people try and get away with trading under the radar for as long as possible, and while some people do get away with it, if you do happen to be reported or found out about, or suddenly come into a large sum of money, it could present many problems for you and may even result in the fall of the business that has worked so hard on.
If you currently have a full-time or a part-time job, you will still be able to register yourself as self-employed if you do self-employed work or own a business. It is still a legal requirement to register as self-employed. The main reason why you may not be able to register yourself as self-employed is if your current employment contract prohibits you from doing so because of a conflict of interest.
Then you may need to choose between being employed or self-employed or seek out employment that allows you to run a business in your own time. Apart from the primary reason for it being a legal requirement to register yourself as self-employed, there are other benefits to registering as self-employed with HMRC, which include:. Most people who work for themselves and work their own hours etc.
Most self-employed people are sole traders, and it is probably the most straightforward process when it comes to registering as self-employed. Sole traders are solely responsible for the running of their business and can keep all proceeds. However, all debts will also be completely your responsibility. A limited company is a distinct company with a brand identity. You may need to assess your self-employment goals when deciding whether you want to register as a sole trader or a limited company.
It may also help to speak to a professional financial advisor. Besides registering as self-employed with the HMRC, there are other responsibilities involved with being self-employed in the UK. One of your biggest responsibilities will be paying your own National Insurance Contribution. National Insurance is a legal tax requirement for anyone earning money. The other major thing that you will become responsible for as a self-employed person is submitting your Self Assessment tax return to the HMRC.
Once this tax return is submitted, the HMRC will calculate your tax bill and send it to you to be paid. The deadline for online Self Assessments is the 31st of January. As a self-employed business owner, it is expected that you are aware of the various responsibilities that you have. That is why you should take the time to become business savvy and inform yourself on all the legal-requirements of a self-employed person.
There is a slight grey zone here as all people who have registered as self-employed are required to submit a Self Assessment tax return, even if they made no money at all or under the personal allowance. As a self-employed person, you are fully responsible for your own insurance. If you are using a vehicle for your business to buy stock or drop off goods etc it is highly recommended that you get vehicle insurance. Another type of insurance that is highly recommended is professional liability insurance.
Accountants are legally required to have this type of insurance. Once you have registered as self-employed, your next steps will depend heavily on what stage you are at with your business, products and services.
The first thing you need to do is ensure that you have an efficient system in place for recording income, expenses and other finances. The more detailed your financial records are, the more likely you will be able to satisfy the HMRC when it comes to your tax returns. One of the things you should look into is health and safety compliance and ensure that your business premises and operations comply with all industry standards. Speaking to other self-employed people will help you gain insight and knowledge on what to expect going forward.
Now that you are officially self-employed, you can start working towards your business goals and advertising your products and services to the public without the risk of someone reporting you to the HMRC.
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Home About Us Contact Menu. FREE newsletter. Telling the truth about SME life today. Joel Hurst March 17, 7 mins. Share on facebook. Share on twitter. Share on linkedin. Share on email. These estimated debts are legally due and can only be displaced by sending in a tax return within 3 years of the filing date for the return. Outside this time limit it may not be possible to change the bill. Alan stopped trading on 30 May and took a job as an employee.
Even though Alan was only trading for a few months in the tax year to 5 April , he will need to complete a tax return for that year. It is likely that he will be sent a tax return for the tax year to 5 April as well.
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