Setting up
your business

If you want to trade as a sole trader (or a member of a partnership as an individual), you need to register as self-employed with Her Majesty’s Revenue & Customs (HMRC).

How and when to register

You should do this straight away, or you risk a penalty.

There are three ways to register: a form, online or by phone.

Pros and cons of self employment

Advantages of self employment

Self-employment is the easiest way to start a business - there are far fewer reporting requirements for a sole trader than a limited company, for instance. And accounting is much easier (and hence bills for accountants are lower).

Disadvantages of self employment

However, if you’re self employed then YOU are the business. Its profits are your income (so you may not able to easily minimise your tax bill). Its debts are your debts. And its mistakes are your mistakes - you can be sued and made personally liable if something goes wrong.

More information

For more information on the rules about income tax, NI, administration and so on, either read the advice on being a sole trader or a member of a partnership.

There are some cases where HMRC won’t treat you as self-employed.