If you sell your goods or services to others directly, and the payments are not taxed before they're paid to you (i.e. you're not paid through payroll on pay-as-you-earn), then you're probably self-employed.
The Government website has more details on what self-employment looks like.
As somebody who is self-employed, you can choose from several legal structures for your business:
A sole trader is somebody who runs their own business as an individual; you can keep all your business’s profits after you’ve paid tax on them, but you’re also personally responsible for any losses.
If you have registered your business with Companies House, then you won't be operating as a sole trader, but as a "Limited Company".
This is pretty different to working as a sole trader. If you're working this way, technically you're not self-employed (in the eyes of HMRC), as you're an employee of the business that you own—so you don't need to register as self-employed.
This article is focused on sole traders registering for self-employment with HMRC, so that's enough about limited companies for now.
You have until the 5th October after the end of the tax year in which you became self-employed to register with HMRC.
The tax year runs from 6th April to 5th April.
So, for example: if you start working as self-employed on 1st May 2023, you've got until 5th October 2024 to register.
It's best to do it sooner rather than later, as you'll have to complete and pay your first tax return by 31st January 2023—so you'll need to make sure you have the funds to cover the bill.
To register as self-employed, you’ll first need to sign up for a Government Gateway account.
To do so, you'll need to create your unique sign in using:
Once you’ve got access to your Gateway account, you’ll then need to make sure you’ve registered for Self Assessment.
Be sure to register in plenty of time, as it can take 10 days to get your UTR (Unique Taxpayer Reference) and activation letter for your account; you’ll need both in order to complete your yearly Self Assessment.
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Choosing an accountant is a key decision. Find the right accountant and they’ll make your life easier, while helping you to maximise your income and minimise your tax bills.
There are a few important ways that you can help your sole trader clients to save time and money and become more successful. Why wouldn’t they love you for that?
When you become a sole trader, you’ll also need to register for Self Assessment and comply with its requirements. Here are the answers to 15 Self Assessment frequently asked questions.
