How to register as self-employed

HMRC looks at the overall nature of your working relationship to decide whether you’re self-employed. There isn’t a single test that determines your employment status, so all the circumstances are considered.

You’re more likely to be self-employed if you:

• run your own business and are responsible for making a profit or loss;
• decide how, when and where you carry out your work;
• work for more than one client or have the freedom to do so;
• provide your own tools, equipment or materials where appropriate;
• can hire someone else to help you or complete the work at your own expense;
• are responsible for correcting unsatisfactory work in your own time and at your own cost; and
• invoice your customers for the goods or services you provide.

If you’re unsure whether you’re self-employed or an employee, you should check HMRC’s guidance, as getting your employment status wrong can affect how you pay tax and National Insurance.

You may not be considered self-employed if, looking at the overall working relationship, HMRC concludes that you’re working as an employee.

You’re more likely to be an employee if:

• you’re required to carry out the work personally and cannot send someone else in your place;
• your employer tells you how, when and where to do your work;
• you’re expected to accept the work that’s offered to you, and your employer is expected to provide it; and
• you receive employment benefits such as paid holiday or statutory sick pay.

Your employment status affects how you pay tax and National Insurance, as well as your employment rights. If you’re unsure about your status, you can use HMRC’s online employment status tool or seek professional advice.

There isn’t a single business structure that’s right for everyone. The best option depends on your circumstances, including the level of financial risk you’re prepared to take, how much administration you’re willing to manage and your plans for growing your business.

The table below highlights some of the main differences:

Before deciding, consider:

• how much personal financial risk you’re prepared to accept;
• how much administration you’re willing to take on;
• how you expect the business to grow; and
• whether you intend to work alone or with other owners.

If you’re unsure which structure is right for you, consider seeking professional advice before registering your business.

The steps you need to take depend on the business structure you choose.

If you decide to operate as a sole trader or become a partner in an ordinary partnership, you’ll usually need to:

• register for Self Assessment with HMRC if you’re required to do so;
• keep accurate business records;
• register for VAT if your taxable turnover exceeds the VAT registration threshold or you choose to register voluntarily; and
• check when Making Tax Digital (MTD) for Income Tax will apply to your business.

If you set up a limited company, you’ll also need to:

• register the company with Companies House;
• register the company for Corporation Tax with HMRC; and
• meet the company’s ongoing filing and reporting obligations.

Whichever business structure you choose, you may also have additional responsibilities. For example, if you employ staff you’ll normally need to operate a PAYE payroll and meet your workplace pension duties. If you occupy business premises, you may also need to pay business rates.

For more information about registering your business, check HMRC’s guidance:

• Set up as a sole trader
• Register a limited company
• Register for VAT