Today, thanks to the gig economy, more and more people are becoming self-employed. If you are considering working for yourself and prefer the idea of working in a role where you get to call the shots and earn unlimited income based on the amount of work that you do rather than a salary, then this could be the right career step for you to consider. However, before becoming self-employed, it’s important to consider if you have done everything that you need to do when getting started. If you have taken on a new self-employed role, you should register as self-employed with HMRC as soon as possible. You will need to do this regardless of whether you are self-employed full- or part-time, whether you are doing gig work, or setting up your own business.
Do You Need to Apply for Self-Employed Positions?
Whether or not you will need to apply for self-employed positions will vary depending on the type of work that you do. You won’t need to apply to start your own business as a sole trader, but if you want to do gig work for a company like Uber, for example, then you might need to first apply to work with the company and show that you have all the required documents such as insurance on your vehicle and the right to work in the UK before they will allow you to start working with them.
Can You Be Employed and Self Employed?
Yes, you can be employed and self-employed at the same time. The gig economy has made this easier than ever to do and there is nothing stopping you from working at your regular job Mon-Fri and taking on some gig work on the weekends like delivering pizza on a self-employed basis if you want to make some extra money. However, there are a few things to consider if you want to do this – firstly, make sure that there is nothing in your employment contract to say that you shouldn’t take on any other work while working for the company, and bear in mind that your tax payments are likely to increase as you will be taxed on both jobs.
How to Register as Self Employed
It’s usually quick and easy to register as self-employed. All you need to do is head to gov.uk and register for an online account. Use your Government Gateway details to complete your registration and add all the information requested such as your contact details and trading name. You will need to provide the date that you started your business and your National Insurance number. Once you have done this, you will receive a letter with your Unique Taxpayer Reference (UTR) from HMRC and your online account will be set up, where you can get access to digital government services.
When Do You Need to Register as Self Employed UK?
All you need to register as self-employed in the UK is your basic personal details and your National Insurance number. You will need to provide further information on the type of self-employment that you do such as what kind of service you provide and the date that you started working for yourself. To access your online account, you will need to sign in with Government Gateway, so you should also get a Government Gateway ID when registering. You will also need to decide on a name for your business – most self-employed people trade under their personal name, but there is nothing stopping you from choosing a name that makes your business stand out. However, make sure that you’re not using the trading name of another existing business if you decide to do this.
When Should You Register for Self-Assessment?
HMRC say that you should register for self-assessment as soon as possible after starting your own business. However, there is a deadline for this – you will have up until October 5th after the end of the tax year that you started your own business or became self-employed. For example, if you started your business in September 2021, you would have until the 5th of October 2022 to register as self-employed. However, it’s not a good idea to wait until the last minute to register your business, as you could end up with a huge tax bill if you don’t register by the deadline for any reason.
HMRC Register as Self Employed: Who Should Register?
Anybody who works for themselves should usually need to register as self-employed in the UK. You are likely to be self-employed if you run your own business, decide how and when you work, are able to hire stay, charge a fixed price for your work that is agreed upon with your customers, or sell goods or services for a profit. If your line of work involves any of these, then it’s likely that you will need to register as self-employed.
On the other hand, you are not likely to be classed as self-employed if you are required to personally provide a service and are not able to hire somebody else to do the work for you. You are not likely to be self-employed if your work is supervised, directed, or controlled – although this can vary depending on the type of contracts and clients that you have while self-employed, and might not always mean that you are not self-employed. However, if you have no real freedom of action when it comes to your work, for example, if you are not free to refuse a contract that you do not like, you are unlikely to be classed as self-employed. Understanding your self-employment status is essential since this will impact any employment rights that you have and how you pay tax. You can use the employment status checking tool from HMRC to find out more if you are not sure about your situation.
Being self-employed does not always mean that you are a sole trader, however. If you work for yourself on your own, you are probably classed as a sole trader, but there are other types of self-employment. If you are in a business partnership, for example, then you will need to register as self-employed but as a partner, rather than a sole trader. On the other hand, you can set up your business as a limited company, which is a little bit more complicated, as you are both the owner of and an employee of the company. Tax and National Insurance calculations will also be different if you decide to go down this route.
Choosing the right structure for your business is an important part of setting up as self-employed. There is no right or wrong answer when it comes to the structure that you choose; it’s a personal decision. However, it’s important to understand that limited companies are in the public domain and have expensive reporting and compliance duties, while there is no obligation to publish business information for a sole trader or partnership. On the other hand, the business is a different legal entity to yourself when you set up as an LTD company, which helps to protect your personal assets.
When Do You Pay Self Employment Tax?
Once you are registered as self-employed, there will be a number of responsibilities that you will need to keep to. You should be sure to keep accurate records of how many sales you make and any outgoings from your business. This will make it easier when it comes to filing your Self-Assessment tax return since you will have easy access to how much money you have made in the year and the expenses that are to be deducted. There are several apps that you can use, such as QuickBooks, which you can easily connect to your bank to keep track of income and expenses for your business.
By January 31st each year, you will need to file your Self-Assessment tax return, which you can fill in and send easily online. You will need to pay any tax you owe to HMRC on both the 31st of January and 31st of July, although a payment plan can be set up to make payments more frequently if HMRC agree. You will need to pay Class 2 and Class 4 National Insurance contributions along with income tax.
Help Registering as Self Employed for People with Additional Needs
Some people might find registering as self-employed more difficult. You can use the additional needs page on gov.uk if you are blind, partially sighted, deaf, hearing-impaired, have a speed impediment, or English isn’t your first language. You can also find services available to help you if you want to register as self-employed but find it difficult to process complicated information, fill in forms, or use the phone or internet, due to a condition such as dyslexia, disabilities, or mental health.
Being self-employed can be an ideal way to work if you like being your own boss and managing your own time. Whether you’re offering an online service, taking on gig work, or setting up a shop, it’s important to know what’s required of you when it comes to registering as self-employed and getting started.
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