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Hello, I’m Sara, a Chartered Accountant who transitioned into running an online business. I understand just how daunting and confusing it can be to take the leap into self-employment. The questions, the uncertainties, and the steep learning curve are all challenges I’ve faced myself. Whether you’re in the early stages of planning to go self-employed, just dipping your toes into making money on your own terms, or already fully committed, this blog is dedicated to helping you every step of the way. Through detailed guides, expert tips, and practical advice, I aim to be your go-to resource. From mastering financial management and navigating tax obligations to setting up the foundations of your business, I’m here to provide you with the clarity and confidence you need to thrive in your self-employment journey.
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A Beginner's Guide to Becoming Self-Employed
Learn the essential steps to set up as self-employed, register with HMRC, and manage your taxes.
If you're unsure about how to get started with self-employment, how taxes work for sole traders, and what financial details you need to keep track of, you're in the right place!
While searching online can provide a wealth of information, it can also be overwhelming without a clear starting point.
That's why I’ve created this organized summary—to guide you through the process of becoming self-employed, with all the necessary information presented logically.
What is Self-Employment?
Being self-employed means working for yourself, offering your skills, services, or products independently rather than for an employer.
Self-employment is often referred to as being a ‘sole trader’ or ‘freelancer’. However, when it comes to taxes, these terms essentially mean the same thing—it's just that different industries tend to use different terminology.
As a self-employed individual, you’ll have certain business responsibilities, even if your business is just you. This includes reporting your income, paying taxes, and submitting necessary information to HMRC. Unlike salaried employees, taxes aren’t automatically deducted from your earnings, but you'll be able to claim deductions and allowances to reduce your tax liability.
The Beginner's Guide to Becoming Self-Employed
This 8-part series covers everything you need to know to set up as a sole trader correctly and manage your finances effectively. If you want to explore any topic further, each guide includes links to more in-depth resources.
This guide assumes you’ve already decided on your business idea. Still looking for inspiration? Check out this guide for 9 high-profit, low-investment self-employment ideas.
Understanding UK Business Structures
Before starting your business, ensure that you have chosen the right business structure for your needs.
Registering as Self-Employed
Follow a step-by-step guide to registering as self-employed with HMRC on the .GOV website.
Setting Up Your Business
As a business owner, it’s your responsibility to establish the necessary foundations to sell, market, and deliver your products or services. Use this checklist to get started.
Managing Your Taxes
Learn about the taxes you must pay, the applicable tax rates, and how to settle your obligations with HMRC.
Tax-Deductible Expenses
Discover which business expenses you can legally deduct to lower your tax bill.
Tracking Income & Expenses
Learn how to track your income and expenses efficiently and keep necessary records to make tax time easier.
Part 7: Important Tax Dates and Deadlines
Keep track of filing and payment deadlines to stay compliant with HMRC.
Use this step-by-step guide to accurately complete your tax return online, ensuring no mistakes or missed sections.
Key Tax Terms
Understanding tax jargon can be challenging. Here are a few essential terms to get you started:
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Tax Return: A form used to declare your business income, expenses, and any tax allowances or reliefs you wish to claim.
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Tax Year: Runs from 6 April to 5 April each year. Tax rates typically change at the start of a new tax year.
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Taxable Business Profits: The amount left after deducting allowable business expenses from your income. A negative result indicates a business loss.
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Allowable Expenses: Expenses legally deductible against your income to reduce your tax bill.
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HMRC: Her Majesty's Revenue and Customs—responsible for setting tax rules and collecting taxes.
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Bookkeeping: The process of recording business transactions and keeping records to meet legal obligations and prepare accounts and tax returns.
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Disallowable Expenses: Expenses that cannot be claimed against your taxes, even if they are part of running your business.
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UTR Number: A unique 10-digit code that identifies you once registered for self-assessment.
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Self Assessment: The system HMRC uses for individuals to declare
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untaxed income on a tax return and pay what’s owed.
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Accounting Period: The period (usually 12 months) for which a sole trader compiles income and expenses unless starting or ending self-employment.
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Income Tax: A portion of your earnings taken by the government to fund public services.
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National Insurance: Contributions made to the government to help fund state benefits.
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Payment Plan: An arrangement with HMRC to pay outstanding taxes in installments if you’re unable to pay in full.