Have you made the huge decision to leap into the world of the self-employed? If so, congratulations, there’s in question you are at the beginning of an exciting adventure.
However, before you get too involved with the day-to-day affairs of your new venture, there are a few things to keep in mind. The first is to make sure you are set up as self-employed with the HMRC. It may also be necessary for you to register as a sole trader.
While there may be other things to do, as well, such as choosing a name and logo for your venture and to set up banking with services such as those offered from Amaiz, right now, you need to focus on the HMRC setup process, which is further explained below.
The Process to Register with the HMRC as Self-Employed
To register yourself as self-employed with the HMRC, follow these steps:
· Make sure your work is considered self-employed using the Employment Status Indicator.
· Create an account online with gov.uk.
· Receive your details via post.
· Complete the registration using your new Government Gateway details and business information.
After you have registered as self-employed, there are several responsibilities and obligations you will have, such as completing the Self Assessment tax return every year.
Why Is it Necessary to Register as Self Employed with the HMRC?
For those who are self-employed, it is necessary to register with HMRC so it knows what you are earning and can collect taxes accordingly. The question is – how do you tell if you are really self-employed?
There is a tool offered by the HMRC called the Employment Status Indicator. This helps you figure out the answer to this question. However, you are likely going to be considered self-employed if you meet the following criteria:
· Run your own business.
· Have more than a single customer at a time.
· Make your own schedule.
· Can decide if you want or need to hire more people.
· Have most or all the equipment and tools needed to do your work.
· Are responsible for completing work that is unsatisfactory or unfinished on your own.
· Charge a specific, fixed price for your work that is agreed by a customer or client.
· Sell any services or goods for a profit rather than just selling items you no longer want.
If you answered “yes” to one or more of these questions, you need to follow the self-employed registration process.
Registering as a Self Employed Individual
The process to register as being self-employed is straightforward. Go to the online registration portal provided by the government and put in your current email address. After you are fully registered, the HMRC provides you a letter including your 10-digit UTR or Unique Taxpayer Reference. HMRC also provides you with an online account. This account gives you access to all types of different government services.
This is also when you should create a name for your business. There are many people who just conduct trade with their own name. While this is one option, you can also choose one that helps you stand out from the crowd. If you choose to use a more specific trading name, be sure you conduct a search online to ensure there are no other businesses operating under the same or too similar of a name. This will help you avoid confusion.
Understanding the Process
As you can see, registering as self-employed is essential. While this is true, you still have some decisions to make, so be sure to keep this in mind. Knowing what to do and why it is important will help you get your business off to a great start.