Lots of us are sick of our jobs. If being furloughed and having to adapt to new ways of working has perhaps taught us anything, we need to spend time doing things that we love. Maybe you want a pay rise or extra training and your employer just won’t see your career as anything important. If you ever wanted to work for yourself, be self employed, you’d be classed as a sole trader. But what steps do you need to take in setting up as a sole trader? Let’s take a look.
Is It Right For You?
Is self employment right for you? Firstly you need to ask if working for yourself is what you want to do. Lots of people dream about it but it’s actually a lot harder bringing that dream into reality. Secondly, there are other ways to work for yourself than being a sole trader. You could set up a limited company or become a partner in a business. Once you’ve figure out what is right for you, to set up as a sole trader you must tell HMRC (Her Majesty’s Revenue and Customs) that you are going to pay tax through a self assessment. With this you will need to file and submit a tax return every year.
Set Yourself Up
Setting up as a sole trader is key if you are earning over £1000. Everyone has a £1000 tax free allowance that you can earn without having to declare anything to the tax man. Once you’ve gone over this, which hopefully you will do if you are going full time self employed, you have to become responsible for filling all your numbers. You’ll need to register on the HMRC website that you are now self employed and you’ll be able to submit your returns every year via that system.
You’ll have to become responsible for keeping records of what you’ve earned and paid out in expenses. Along with paying your taxes on time and paying national insurance contributions. Your submission must be sent in before the end of January the year following the year you’re submitting for. So for 2019/20 tax year, it must be submitted by the end of January 2021, for example.
Who Do You Work As?
It’s easy enough to start trading as simply working under your own name. You can though, decide to trade under a different name. This business name must not be offensive or be the same as a trade mark that already exists. It cannot imply any connection to government in any way, unless you get permission. You also can’t include ‘limited’, ‘Ltd’ or other variations in the name. Your name and the business name (should you choose to have one) must be on your paperwork such as invoices.
How to start a pressure washing business.
Time To Register & Start Working
Now is the time to register as self employed and start making some money from your job. If you haven’t sent a tax return in this way before you need to register on the government website. You must also register before the 5th of October in your second year of business. Fail to do this and you could be fined.
You’ll be sent your 10-digit UTR (unique taxpayer reference) and information about how to set up to submit your self assessment tax returns. You’ll need your UTR in order to submit your assessment each time. Be sure to save your log in details somewhere safe.
Setting up as a sole trader is just the first step to a life that many people crave. Make sure you know exactly what you need to do with your files, folders and figures to make your submitting these tax returns as simple as possible. Good luck with your new venture!
