Setting up as a self-employed sole trader is the simplest and quickest way to start a business. There are lots of good reasons for wanting to work for yourself, like wanting to work from home to fit in better with family commitments, having a great idea or passion that could be turned into profits or wanting to take more control of your life and be your own boss. If you get it right, being self-employed can be exciting, rewarding and challenging.
It's important to let HMRC know as soon as possible when you start working for yourself even if you already fill in a Self-Assessment tax return each year. However, you can't register in advance. There are no registration fees to pay but if you delay registering, you may have to pay penalties.
You will also need to arrange to pay Class 2 National Insurance contributions straight away. This is £2.50 per week if you expect your earnings to be above £5,315 for the 2011-12 tax year. If you are unable to pay by Direct Debit, HMRC will send out payment request for payment on 31 January and 31 July.
You can trade under your own name or use another business name but you must make sure that your business stationery displays your name as well as the trading name if you decide to use a business name. Your trading name should not be the same as, or too similar to, that of a business which already exists.
Aspen Accountancy can help you with all the necessary paperwork and provide you with timely advice as required.