Self Employment
Tax Services

The first step is to decide on your business name. You can trade under your own name or choose a business name, but keep it simple and clear. You’ll also need to choose your business structure – most self-employed people register as sole traders, but you can also set up a limited company or partnership.

Next, you’ll need to register online with HMRC through their government gateway (https://www.gov.uk/working-for-yourself). Set up an account and then register for Self Assessment, selecting self-employment as your reason. This will provide you with your Unique Taxpayer Reference (UTR) number, which is your 10-digit self-employment reference from HMRC.

It’s also important to look into schemes like IR35 (https://www.gov.uk/guidance/check-employment-status-for-tax) that help determine your employment status and tax obligations. Choose an accounting period, usually the tax year from 6 April to 5 April, but you can opt for a different 12-month cycle.

Be sure to keep records of all your business income and expenses. You’ll need to report this information on your annual Self Assessment tax return, which must be filed by 31 January each year for the previous tax year, along with any tax owed.

You must register as self-employed at the very first opportunity as soon as you start working and match the conditions of a sole trader. However, there is no specific legal deadline to register as self-employed with HMRC in the UK. The key points about registration deadlines are as follow.

• You need to register to start paying tax on your self-employed income. The longer you leave it, the more backdated tax you may owe.
• The deadline for sending your Self Assessment tax return online is 31 January each year. If you fail to register on time, you may miss filing deadlines and get fined.
• You should register within the first few months of becoming self-employed to ensure everything is properly set up and compliant from the beginning.
• For the 2021-2022 tax year, the deadline to register for Self Assessment if you’re self-employed or a sole trader is 5 October 2023.
• While there are no fines for not registering immediately, it is strongly advised to register as soon as you start earning income from your self-employment.

So in summary, there is no legal cutoff date but prompt registration is highly recommended to avoid penalties, meet filing deadlines, and ensure you are meeting your tax obligations properly right from the start.

The main difference between being a sole trader and being self-employed is that “sole trader” refers to a specific business structure, while “self-employed” describes an employment status.

A sole trader runs an unincorporated business as an individual, personally owning all its assets and liabilities. There is no legal separation between the business and the owner. Sole traders handle their taxes, including Self Employment tax, through self-assessment, reporting business income and expenses on a personal tax return.

On the other hand, being self-employed simply means you work for yourself rather than an employer. You could be self-employed under various business structures, such as a partnership or limited company. Regardless of the structure, if you’re working on your own terms, you’re responsible for your Self Employment tax obligations and other financial responsibilities.

In summary, a sole trader is a specific unincorporated business structure owned and operated by one individual, whereas self-employed is a broader category encompassing anyone running their own business. While all sole traders are self-employed, not every self-employed person is a sole trader.

If you have just started self-employment and have a business idea, talk to us and let us advise you on your business and how to take it forward. Self Employment may not be the perfect solution for your business.

Here are some tips and advice for self-employed individuals:

• Have a business plan – Outline your business goals, target market, operations plan, and financial projections. This will help guide your strategy and measure progress.
• Separate personal and business finances – Open a dedicated business bank account and keep detailed records of income and expenses. Use accounting software if needed.
• Understand your tax obligations – Educate yourself on taxes, register with HMRC promptly, file and pay taxes on time, and work with an accountant if needed.
• Save for retirement – Make contributions to a private pension plan, as you won’t have employer pension contributions. Take advantage of tax breaks for the self-employed.
• Look after your wellbeing – It’s easy to overwork when you’re your own boss. Make time for exercise, rest, vacation, and a healthy work-life balance.
• Create support networks – Join relevant business associations and networking groups. Identify mentors who can provide guidance and support.
• Have the right insurance – Consider business liability insurance, professional indemnity insurance, public liability insurance, etc. to protect your business.
• Develop a brand – Create a professional business name, logo, website, email, and marketing materials. Use social media and SEO wisely.
• Keep growing your skills – Take advantage of courses and training to continuously expand your knowledge and offer new services.
• Manage finances wisely – Track cashflow, invoice promptly, pursue owed debts, and have an emergency fund to cover income gaps.

The key is planning well, managing finances diligently, looking after your wellbeing, and continuously improving. Reach out for support when needed.

If you are no longer self employed, you would need to inform HMRC and fill in a form specisified for this purpose. Following are some key steps to take if you want to stop being self-employed:

• Inform HMRC: Notify HMRC that you are ceasing self-employment by completing form CESS1. This stops you having to complete further self-assessment tax returns.
• Close business bank account: If you have a separate business bank account, close this account and transfer any remaining funds to your personal account.
• Cancel registrations: Deregister for VAT if registered and cancel any business-specific registrations.
• Pay outstanding tax: Pay any outstanding income tax, National Insurance, VAT, corporation tax or penalties. Produce final accounts and submit a final self-assessment return.
• Retain records: Keep business records for at least 5 years after the 31 January submission deadline of your final tax return. This is needed if HMRC investigates.
• Review insurance: Cancel or amend policies like public liability insurance, employer’s liability insurance. Some policies may still be useful for covering past activity.
• Return stock: If closing a limited company, return unused stock and materials to suppliers if possible. Sell off remaining stock and write off if necessary.
• Cancel services: End any standing orders or direct debit payments for business services. This may include utilities, subscriptions, accountants etc.
• Inform stakeholders: Tell customers, contractors, staff etc. that you are closing down the business and will no longer be operating.
• Sell assets: Sell any business assets and equipment you no longer need. Use proceeds to pay off debts first.
• Settle debts: Pay off any business loans, creditors, expenses. This ensures a clean break on closing.

Following these steps helps formally cease your self-employed status, while tying up any loose ends.