You might be unsure whether you need to register, but if you are trading at all then you should be registered even if you are making a loss or have no income from your self-employment.
There are 3 main types of self-employment:
Sole trader
If you are working alone then this is you. It could apply to a plumber, market stall trader, ebay seller, accountant or consultant. There will be a tax return to fill in at the end of the year in which you report everything you earned and everything you spent. If there is any profit then this is liable for taxation.
Partnership
If you are working with another person, eg your spouse or a friend, then you should register as a partnership. This means you are jointly responsible for the business and can share the profits. You set the percentage that each partner is entitled to. Each partner needs to fill in a personal tax return at the end of the year, and you also need to fill in a partnership tax return.
Limited company
This is a more complex mechanism and involves more paperwork. If you register as a company then you create an entity which is separate from you. You become a 'Director' of the company rather than being a sole trader and this can have some savings when it comes to paying tax.
Find more info at http://www.hmrc.gov.uk/selfemployed/
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| Don't neglect the paperwork! |
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