First of all you will need to choose how you want to trade, whether to become a sole trader or whether to set up a limited company for your business. There is no right or wrong way, either is fine and it just depends on what suits you best. Being a sole trader is often seen as a simpler way to get started, it means you and your business are effectively the same thing, and the simplicity is due to filing your accounts at the end of the year via self-assessment. HMRC’s online self-assessment calculates the amount you owe them, and you can keep the profits from your business once you have paid HMRC.
You may prefer to choose to set up a limited company to trade through. This brings with it certain legal responsibilities as you will become a director of your company, and your company will be subject to business tax regulations. This can mean that there are some accounting complexities, however the main advantage of a limited company set up is the limited liability – in other words if your business goes bust then your personal assets are not at risk as the liability rests with the business.
For more on how to set up as self-employed, listen to episode 2 of our All About Self Employment podcast, available here.