Whether you are a recent graduate who can’t find work, or have work but are sick of your job, or simply want to be your own boss, Freelancing can be one of the most rewarding choices you make. Starting your own business is a big decision that will take a lot of commitment and comes with its own challenges. Use this simple guide to inform yourself well and prepare you for Freelancing in the UK.
What’s in a name?
Your business name is important, so when it comes to selecting a name for your business, take the following into consideration:
- Make sure it is professional
- Ensure that it does not contain sensitive words
- Check that the name you are proposing is available at the Companies House by using WebCheck.
- As a sole trader ensure that your trading name is unique by doing online research
- If you plan on having a website check for domain name availability on domain name registration sites and include your service in the business name (if possible) for SEO purposes.
Take it one step further and create a brand that will help you stand out from the crowd. Having a logo for your stationary, business cards and letterheads will also help when you approach banks and potential clients.
Getting your business bank account
Having a business bank account will help you to keep track of all your business dealings, including invoices and payments. You will most likely have to meet with a business manager and provide the following:
- Your business name and address
- Letterhead with your logo
- Photo ID such as a driver's licence or passport
- Additional documents if you're a limited company. More information here.
Making it official
To register as self-employed with HM Revenue & Customs (HMRC) you will need to provide:
- Date of birth
- National Insurance number
- Telephone number
- Email address
- Start date of self-employment
- The nature of your business
- Business address
- Business telephone number
- Your Unique Tax Reference (UTR) – if you have already completed the self- assessment. More information on how to do this here
- The business’ UTR – if you’re joining an existing partnership
- If relevant, the full name and date of birth of any business partners
Getting set up as a sole trader, or freelancer, is the easiest and quickest way to start a business. You won’t have to pay a registration fee and there is not too much paperwork involved. You do have to register within 3 months of starting to avoid penalties based on unpaid National Insurance contributions.
NI, VAT and Taxes
If you're a sole trader you'll be expected to pay income tax and National Insurance contributions. If you're a limited company, you must tell HMRC if it's liable for Corporation Tax, pay any Corporation Tax due and file a Company Tax Return on time.
You’ll need to register for Self-Assessment and Class 2 National Insurance as soon as you can after starting your business. You need to do this even if you’ve completed tax returns before.
Visit the HMRC website for more information or have your accountant take care of it for you.
Register for VAT by contacting HMRC if you expect a turnover of over £83,000 turnover a year. Introduction to VAT provides detailed information on how it works.
Keep your books in order
Every business is expected to keep their books in order. This means bookkeeping and having a financial system that will help you keep track of all your invoices and payments at the end of every month. Setting this up properly form the start will save you time and hassle later.
There are many accounting software programs that are very thorough that can help you to simplify things while keeping track of everything important. If you’re self-employed, your business will have various running costs. You can deduct some of these costs to work out your taxable profit as long as they’re allowable expenses.
You will be able to print out all your invoices at the end of the year and give them to your accountant along with your bank statements. Also include payments, receipts and any other overhead or business expenses, including travel. If you have accounting software, your accountant can do it online for you!
Working from home
If you will be working from home, check with your local authority to see if you are required to pay any business rates. Working from home can affect your taxes, home insurance and mortgage.
Following these tips will help you set yourself up as a Freelancer. To ensure that you have covered everything you need, review the Government online guide on setting up a business. You’ll be ready for business in no time at all!