When to Register as Self-Employed

If you work for yourself, whether as a freelancer or a contractor, then you’re going to have to register as self-employed with HMRC. You may also have to register as a sole-trader.

The process of registering as self-employed is pretty straightforward. But many newly self-employed people wonder when is the best time to do it.

So we put together this short guide to how and when to register as self-employed.

Am I Self-Employed?

In short, it means you work for yourself. You’re your own boss, doing your own thing. You’re responsible for your own success or failure, and you get to decide how, where and when you do your work.

You’ll find a handy list of criteria for qualifying as self-employed on the Government’s website. It’s worth a look – you might already be self-employed without even realising it!

If you work for yourself it’s important that you register as self employed with HMRC

When to Register as Self-Employed

You need to register as self-employed as soon as possible. Ideally, you should do it from the moment you start doing any work that could be classed as self-employed. If you’ve been doing this sort of work for a while and haven’t yet registered as self-employed, don’t delay!

There is actually a deadline for registering for self-employed. It’s the October 5 following the end of whichever tax year you started working for yourself. So if you started doing self-employed work in January 2020, you’ll have until 5 October 2020 to get registered.

Don’t leave it too late though. If anything happens to prevent you from registering before the deadline, you could face a considerable tax bill. So get yourself registered as self-employed as early as possible. That way, you can rest assured that everything will be sorted long before the legal deadline.

How to Register as Self-Employed

The process is very straightforward:

  1. Go to the Government’s online registration portal.
  2. Enter your email address and follow any subsequent instructions.
  3. HMRC will send you a 10-digit Unique Taxpayer Reference (UTR) number by post. They’ll also set up your online HMRC account, and provide instructions on how to access it.

And that’s it! But once you’re set up as self-employed, you’ll take on a range of extra responsibilities concerning the records you keep and the taxes you pay. We’ll explore some of these responsibilities below.

Should I Set Up as a Sole-Trader?

Having registered yourself as self-employed, you may also have to register yourself as a sole-trader.

You need to register as a sole trader if you:

  • Earned more than £1,000 from your self-employed work in the space of a tax year (April to April)
  • Need to prove you’re self-employed for any reason (such as for claiming tax-free childcare)
  • Want to qualify for benefits, so you need to make Class 2 National Insurance payments

Head here to register as a sole-trader. You’ll have to submit a self-assessment tax return by 31 January each year. This means you’ll have to keep records of all of your self-employed business earnings.

Once you hit a certain threshold of earnings, you’ll also have to register for VAT. Head here to read our guide to VAT registration for freelancers and contractors.

Rules for Choosing a Name to Trade Under

At the same time, you’ll have to choose a name to trade under. There are certain rules for sole-trader business names. Your name must not include any misleading terminology, such as “limited”, “ltd”, “LLP”, “plc”, and so on. The Government guidance also stipulates that your business name must not “be offensive”, and you can’t use “sensitive” words or expressions. They don’t specify what counts as “offensive” or “sensitive”, so use your common sense.

Also, your name cannot be the same as any existing trademarks. You can’t call your window cleaning company “Coca-Cola Windows”, for example. But you can trademark your own name, to ensure that nobody else ever uses it.

You’ll need permission to use certain words in your sole-trader business name. Examples include words that suggest you’re connected with government or local authorities, and words that suggest you have official accreditation. Head here for a guide to the sort of words you’ll need permission to use.

Why Do I Need to Register as Self-Employed?

In short, because it’s the law. HMRC needs to know how much you earn in a year so that they can tax you correctly. There are harsh penalties for anyone who fails to pay the tax they owe. Not knowing the law, and not registering as self-employed, is no excuse.

Now That You’re Self-Employed – Get Yourself Covered

Being self-employed means that you’re wholly responsible for your own success. This is an exciting position to be in. But if you’re responsible for your own success, you’re also responsible for your own failure. If anything ever goes wrong – whether it’s a personal injury, an unhappy client, or a case of fire, flood or theft – then you’ll be wholly responsible for handling the situation.

That’s why it’s essential to get yourself insured. Insurance for self-employed workers can cover you for almost every conceivable scenario, from legal defence to damage to your property. Think of insurance as a safety net. You’ll be able to focus entirely on your work and your growth with total peace of mind that should anything ever go wrong, you’ll be able to handle it.

We specialise in insurance for self-employed freelancers and contractors. Our cover starts from just 35p a day, and you can get an online quote in just a minute. Head here to get your free quote today.

Get a quote