Registering as Self Employed - A Quick Guide

[JustCraig]

Thought I would kick start this section of the forum with a guide I wrote for another business forum - Hope it helps people who are new to business.

Registering as Self Employed - A Quick Guide

Becoming a sole trader is the most straight forward way to start a new business. There are no registration fees to pay, it is easy to keep an eye on your financial records, you can make key decisions quickly and you are your own boss.

You used to have three months in which to register your intention to become self employed, otherwise you would incur a financial penalty. From what I have heard this is no longer the case so Ideally you should register the moment you start out as a sole trader. It’s all too easy to keep putting it off and it’s surprising how quickly three months will pass by.

It’s worth baring in mind that all you are actually registering is your intention to work for yourself on a self employed basis, I have spoken to a number of people over the years who believe that you do not need to register as self employed until you hit a certain turnover threshold, if you are already in full time employment or if you are only trading as a “hobby”.

Unfortunately, this is not the case, even if you are in full time employment or your business does not earn any revenue for the first six months of trading, you still have to inform the nice people at the tax office of your intention to engage in enterprise. It’s also worth pointing out that if you are in a partnership, each of the partners must register separately. In a nutshell, any product or service that is offered with the intention of making a profit is technically a business transaction.

Selling part time on eBay is not a hobby, it’s a business (at least in the eyes of the law), the only exception is if you are only selling your personal belongings, but if that were the case then I assume you wouldn’t be browsing this forum. There are three ways that you can register as a sole trader:- The easiest way to register is by completing the on line registration form which can be found by logging on the hmrc.gov.uk website.

You can register over the phone by calling the Newly Self-employed Helpline on 0845 915 4515. Or you can register by post by downloading and completing form CWF1 which you can also find online at HMRC.gov.uk

Once you have notified H.M. Revenue & Customs of your intentions to become a sole trader, you can begin trading immediately; you will not need to notify Companies House; neither will you have to deal with any administrative or accounting requirements which are required of Limited companies.

The moment you become self employed you will be liable for Class 2 National Insurance contributions. I believe this is currently around £2.40 per week but you can find more information Here - This amount is payable even if you are in full time employment, however you may be able to defer the payment until the end of the current tax year. The simplest way to pay is to set up a direct debit the moment you are registered.

Registering as a sole trader isn’t as difficult as it first seems and despite all the negative press they receive H.M. Revenue & Customs really are quite helpful. Considering they will be getting their fair share of your future profits, don’t be afraid to pick up the phone if you need any assistance.

[PGBrew]

In a nutshell, notify HMRC & pay class 1 nat insurance.

[part-time-operator]

also, if you are in employment as well as self-employment, when you do your self-assesment you might be able to claim back some of the tax paid but not the national insurance. you basically end up paying NI twice...

you'll be surprised at how many costs you can count though, so you can actually make a "loss" on your self-assesment and get a tax refund on your employed earnings