One of the main benefits of going self-employed is that it’s easy to start up and run your new business. You can even become a sole trader whilst you’re working as an employee for somebody else, meaning that you’ll still have the stability of an employed job whilst you’re setting up and growing your own business. When you decide to go self employed, there are a number of things that you should expect to need to do. Here are five of the main ones.
Register with HMRC as Self Employed
For tax purposes, you’ll be expected to register as self-employed with HMRC. Once you set up as a sole trader, you’ll be held responsible for paying your own tax and national insurance. You must register as self-employed within three months of starting trading, even if you’re already paying tax each year via the self-assessment process. Registering can be done online, or over the phone if you’d prefer to speak to somebody or have any questions.
Registering for VAT
When you become self-employed, you’ll need to work out whether or not you will need to register for VAT. As of April 2015, if your business has an annual turnover of at least £82,000, you’ll need to register for VAT – anything beneath this amount is not required to register. If it looks like you might hit the VAT threshold at any time over the next twelve months, you will need to register even if you’re not at the threshold at the current time.
Open a Business Bank Account
Starting your own business will require you to open a business bank account. This ensures that the money needed for your business doesn’t get mixed up with your personal money, and also looks more credible and professional for any clients or customers who are making bank transfers as payment. If you’re likely to hold cash for some time it’s also a good idea to open a business deposit account in order to earn some interest on your money.
Keeping Financial Records
Since you will be responsible for paying your own tax, you’ll need to ensure that you keep up-to-date and accurate financial records. This includes records of all of your business transactions, including anything else that your business may participate in such as spread betting – if you’re thinking of trying spread betting, see here for how to spread bet. When the time comes to submit your tax return, you will need to give all of these records to your accountant.
It’s essential that your new business is insured. The cover that you should take out will depend on the type of business that you have and the industry in which you operate. If you employ another person, you will be required to take out employer’s liability insurance by law. If you’re providing a service for clients, you should also consider taking out coverage for professional indemnity, which will cover you if you’re sued by a client if they’re unhappy with a service or product.
Would you like to add anything else that can be expected from going self-employed?