Q. I am thinking of becoming self-employed. Any advice?

A. If you’re going self-employed in the UK as a sole trader, there are many things you should consider.

Notify HMRC, so that they know you need to pay tax through self-assessment and pay Class 2 and 4 National Insurance. Register as a sole-trader on the Government’s website.

Set up a business bank account for business transactions so that these don’t get confused with personal ones. Have a process for recording your income and business expenses. There are a number of Cloud-based accounting options on the market and having accurate and organised records will make things much simpler when it comes to completing your HMRC tax return. If you’re running your business from home, check your tenancy/mortgage agreement to make sure you’re not contravening any terms. You will need to consider business insurance such as Professional indemnity insurance and public liability insurance.

Consider your pension. As you won’t be paying into a workplace pension, a private pension may be necessary to make sure you are not exposed when you retire.

When you go self-employed, you’re effectively setting up a business so you should carefully consider what would be the appropriate business structure. Whilst operating as a sole trader may feel like the simplest business structure there are circumstances where it could be better to incorporate as a limited company.

To ensure that you comply with HMRC requirements, choose the correct business structure, it could be beneficial to seek the advice of an accountant.