So you have made the important decision to start your business and become self-employed but what do you need to do?
Obviously you need a name for your business but what else, below is a guide to setting up as a sole trader:
Register as a Sole Trader
Call HMRC to notify them that you are starting as self employed, have to hand your National Insurance number as they will require this, also have a business start date in your mind as you will also need this. When you have registered with HMRC they will issue you with a UTR (Unique Tax Reference) number.
This is a vital piece of information so keep it safe! You will need this number to deal with HMRC and also for your self assessment which will need to be completed and filed annually (See point 3). If you work within the Construction Industry Scheme this will also be a key piece of information for employers to verify you with HMRC.
When you register with HMRC this will also trigger a requirement on their system to complete a Self Assessment Tax Return every year, they run for the 12 month period Apr-Mar and have to be completed, filed and paid by the following 31st January if filing online. As a sole trader this is where you report your business’s trading profit and HMRC can collect any monies due.
The annual Self Assessment needs to include any income streams you may have, PAYE, self employed, property income, pensions etc so it is always advisable to have a professional compile this for you.
As a sole trader you are literally the ‘business’ and are personally liable for the business debts but it is good practice to keep your self-employed income and expenses separate from your personal account so an additional bank account for the business is always a good idea. In this day and age if you use your personal card every time you make a purchase you don’t want to be wading through loads of personal transactions when you are trying to reconcile your accounts.
This is only a brief guide which will hopefully help you to get started on your journey as a sole trader but remember people like myself are always around to help if you have any issues or questions!