How to register as self employed

The fastest way to get into business is to become a self-employed sole trader. There’s very little paperwork involved and no fees or other charges to pay.

But you can’t simple declare yourself as self-employed. You do need to formally register, and take responsibility for paying your own tax and National Insurance.

Here are the steps you must take to get started properly.

Pick a name

What are you going to call your business? For many new entrepreneurs, this is the most exciting start-up task and one that lots of time is spent on!

Some people simply trade under their own name, or say they are Your Name trading as Business Name. Don’t forget to check that no-one else is using the name – a quick Google search will help you. There’s no register of business names used by self-employed people, but you can check the Companies House register of limited companies.

Tell Her Majesty’s Revenue and Customs

HMRC requires that you notify them within three months of becoming self-employed. This is easy to do, either by filling out the online form or phoning the Newly Self-employed Helpline on 0845 915 4515.

Don’t forget though, or you will be fined £100.

Once you become self-employed you will pay tax each year by filling out a tax return and self-assessing how much you owe. A smart move is to keep tax money aside in a separate account from day one – then you will never find yourself scrabbling to meet a payment. Your accountant will advise how much you can expect to pay.

You will also be responsible for paying your own Class 2 National Insurance contributions, currently £2.40 a week (2009/10 tax year). You will pay extra Class 4 contributions on profits you make over £5,715 (2009/10 tax year). Again, consult your accountant for advice specific to you.

Register for VAT

If you turnover more than £68,000 (from 1/5/2009 - previously it was £67,000) in a rolling 12 month period you will be liable to pay VAT, even as a self-employed person. So keep an eye on how well your new business is doing. As soon as you do pass the limit, you have 30 days to register with HMRC.

Other licences

With some types of business, you need to get a licence before you can start working. For example if you want to set up as a taxi driver you will need to apply for a licence from your local authority.

It’s the same for many other types of work, including being a child minder running a restaurant or pub, or being a market trader. And to get a licence, you will typically have to do some specific training and gain relevant qualifications. You may also have to go through an inspection to ensure your business is shipshape and legal.

Further Resources

For more information, try HMRC's first steps to register as self-employed, and our tips to consider before becoming self-employed.

Our partner, Duport, has launched a new Sole Trader Package which will help you get up and running as a sole trader in a matter of hours (including the forms you need to register with HMRC). The package will also protect your company name in case you want to use a limited company at some time in the future. You can find out more here.