Registering as Self-Employed – 3 Things You Need to Do

Registering as Self-Employed – 3 Things You Need to Do

Firstly, good luck on starting your journey! If you’re just looking for advice on what you need to do, we’ve put together a short guide of the sorts of things you’ll want to think about before you take the plunge. If you’re on the lookout for a personal tax accountant, we’re happy to provide our services as well. 

Am I Self-Employed?

Sounds like a silly question, but people making occasional sales as part of a hobby aren’t likely to be considered self-employed by HMRC. Some people believe that any sales will push them into this category, but that’s not the cast. HMRC has some clear guidance:

You’re likely to be trading if you:

  • sell regularly to make a profit
  • make items to sell for profit
  • sell online, at car boot sales or through classified adverts on a regular basis
  • earn commission from selling goods for other people
  • are paid for a service you provide
HMRC - Working for Yourself Guidance

Occasional sales, spring cleaning, and the odd car boot here and there aren’t indications that you’re self-employed, and there’s no need to register if that’s the case. 

You’re also unlikely to be self-employed if you have a limited company. In this case, you’ll (probably) be both a director and an employee, and we’re planning on putting some advice about that online shortly. 

Can I Get Help, Support or Grants?

In England, you can contact your local growth hub – they’re trained independent experts who have helped thousands of people start successful businesses in the past. The government also issues guidance on help writing a business plan that you might find helpful. 


The first place to start is checking whether you’re eligible for a government-backed Startup Loan

Loans are available up to £25,000 and also come with a business mentor to help get you off the ground. 

Otherwise, commercial lenders are of course available, but be careful, and remember that as a sole trader, your personal assets will be on the line if your business fails. 


Startup grants are rarer than loans, and often come with restrictions on funding. This is a more complicated area, and we advise you to contact us with your specific situation – we’ll be happy to provide you with some quick advice on where to go. Remember, we don’t charge for an initial phone call!

The best place to check for grants that your businesses can apply for is the government’s Business Finance Support search page. That link should take you to grants for new businesses and those trading less than two years. 

On any form of income support?

If you or your partner are currently claiming Universal Credit, JSA or Employment & Support Allowance, you may be eligible for the government’s New Enterprise Allowance. You’re also eligible if you’re on income support and a single parent, sick or disabled – though you have to be over 18. 

You should talk to your JobCentre contact about this. You’ll need to make a business plan (they’ll give you help with this), and if it’s approved, there’ll be a weekly allowance and you might be eligible for a loan too. 

Do I have to Register a Trading Name?

You don’t. You can trade under your own name, or you can make up a name for your business. You can’t use “ltd”, “limited” or similar words, any offensive words, and you can’t choose one that’s the same as an existing trade mark. 

There are also an eclectic list of words you can’t use in your trading name, most of which are self-explanatory. You can’t call yourself an architect if you aren’t one, or use “Ordnance survey”, or “Doctor”. 

What do I need to do?

1) Start Bookkeeping and Accounts

As soon as you start trading, you have to start keeping accounting records. It's probably best to open a second bank account too.

2) Register for Self-Assessment

You're going to have to register with HMRC for self-assessment if your turnover is greater than £1,000.

3) Register for VAT (Possibly)

If your turnover is over £85,000, you must register for VAT. You can register voluntarily if not - though this is rarely a great idea.

1) Start keeping your financial records

If you’re going to be running your business as your main supply, we strongly recommend opening a second bank account to help keep the finances simple. 

Legally, your self-employment finances aren’t separate from your personal finances, but it’s really hard trying to make sure the accounts are right if businesses expenses and income are going into the same account as your ordinary household expenditure. You’ll inevitably end up missing some expenses (and hence paying too much tax) or under-reporting some profit, and possibly getting in trouble with HMRC. Most high street banks offer free accounts for the first 12-24 months. 

You can either record your finances in the “traditional method” or by using “cash accounting”. The former is more complicated, and we generally don’t recommend it. 

Traditional Method

Account for transactions when they occur, regardless of when they were paid. This means that you have to account for the invoice date and payment date separately.

Cash Accounting

Account for money when it flows into or out of the bank. This is vastly easier and if you've got a separate bank account, makes bookkeeping a breeze.

We are happy to offer our services as a bookkeeper to any new business, regardless of what accounting method they’ve used. 

Regardless of whether you’re using an accountant or not, you’ll need to keep records of all your income and expenses as well as VAT and PAYE records if you’re registers or employ anyone. You need invoices for all your expenses and income. 

You must keep your records for at least 5 years after the 31 January submission deadline of the relevant tax year. 

2) Register for self-assessment

You only have to register with HMRC once your turnover is over £1,000. It’s not overly complicated – far less so than most people think!

If you’ve never registered before, sign up here. If you’ve been self-employed, and you have a UTR (Unique Taxpayer Reference), then you can use the imaginatively-titled CWF1 form to register. 

If you’re thinking of having an accountant handle your books for you, then we can register on your behalf. Talk to us if that’s the case – we’ll be happy to advise. This means that HMRC will send correspondence to us directly, and you don’t get slowed down by forwarding bits of paper to us. 

HMRC will send you a letter through the post with an activation code on it. 

3) Register for VAT (possibly)

We’ve already written a post on vat registration questions, so we won’t spend time restating it. 

It’s unlikely, as a new sole trader, that you’re going to be registering for VAT immediately. If you’re selling to the public, you’ll just increase your prices for no real benefit to you. 

It’s possible – if you’re only trading in zero rated goods (such as books, children’s clothes or food) for voluntary VAT registration to be a good idea, but in all honesty this is pretty rare. Get in touch with us if this is the case, and we’ll be happy to talk through your situation. 

Any Further Questions?

If you're thinking of starting out in self-employment, we're happy to have a free, no-obligation phone call, and provide you some help. Best of luck with your business!

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