10 Things You Need to Know if You Are Self-employed
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- AMAccountEx-ltd
- 24 April, 2024
Becoming self-employed is an exciting step, but it also comes with responsibilities — especially when it comes to taxes, accounting, and compliance. To help you stay organised and avoid unnecessary penalties, here are 10 important things every self-employed person should know.
1. Register with HM Revenue & Customs (HMRC) for Self-Assessment
As soon as you start trading, you must register with HMRC for Self-Assessment. This ensures you can report your income and pay the correct tax.
📌 Deadline: You must register by 5th October following the end of the tax year in which you started trading.
Examples:
- Start trading on 1st January 2024 → Register by 5th October 2024.
- Start trading on 6th April 2024 → Register by 5th October 2025.
⚠️ Failure to register on time could result in penalties.
2. Prepare and File a Tax Return
Self-employed individuals must file a tax return each year to declare income and calculate tax.
- Paper submission deadline: 31st October
- Online submission deadline: 31st January
You must file a return if:
- Your self-employed income exceeds £1,000
- You’re a partner in a partnership
- Your taxable income exceeds £100,000
You can file online using HMRC’s portal or ask an accountant to handle it for you.
3. Understand Income Tax Rates
Tax rates change from year to year. Staying informed helps with financial planning.
- Self-Assessment tax is due by 31st January.
- Some individuals may also have to make a second payment on account by 31st July.
Checking the latest HMRC rates ensures you budget correctly and avoid surprises.
4. National Insurance Contributions (NICs)
In addition to income tax, many self-employed individuals must pay National Insurance Contributions (NICs).
- NIC rates and thresholds are updated each year.
- The amount depends on your level of profit and type of work.
This is another area where professional guidance helps ensure compliance.
5. Keep Accurate Accounting Records with Software
Good record-keeping is essential. It helps with:
- Managing cash flow
- Tracking turnover and expenses
- Preparing accounts and tax returns
Using cloud-based accounting software makes this easier and ensures compliance with Making Tax Digital (MTD).
✅ Popular options include QuickBooks, Xero, and Dext.
6. Work with an Accountant
An accountant does more than file tax returns. They can:
- Offer tax-saving advice
- Guide you through business challenges
- Keep you compliant with HMRC rules
- Save you time so you can focus on growing your business
7. Open a Business Bank Account
While not a legal requirement, having a separate business bank account makes life easier by keeping personal and business finances separate. This simplifies bookkeeping and reduces errors when preparing accounts.
8. VAT Registration
You must register for VAT if your taxable turnover exceeds £90,000 in the last 12 months or if you expect it to exceed £90,000 in the next 30 days.
Taxable supplies include most sales of goods and services, unless exempt.
Voluntary VAT registration may also be beneficial for some businesses, so check with your accountant.
9. Choose the Right Business Structure
The most common structures are:
- Sole trader – taxed on profits made, regardless of how much you withdraw.
- Limited company – can offer tax benefits and liability protection.
The right choice depends on your business goals and personal circumstances. An accountant can help you make the best decision.
10. Protect Your Business with Insurance
Business insurance provides peace of mind and protects against risks. Common types include:
- Professional indemnity insurance
- Public liability insurance
- Business protection insurance
- Buildings and contents insurance
Having the right cover in place is an investment in your security and reputation.
How AMAccountex Ltd Can Help
At AMAccountex Ltd, we provide expert support for self-employed individuals across the UK. From registering with HMRC to managing your accounts and planning for tax efficiency, we help you stay compliant and confident in your business.
📞 Call us today on +44 (0) 744 360 9141 or complete our online enquiry form — and let us help you thrive.
