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Setting up as self employed

The first thing to do as a sole trader is to apply for a UTR number (Unique Taxpayer Reference number) and register as self employed with HMRC. QuickRebates can help you apply for a UTR number. For the current tax year (6th April 2019 – 5th April 2020) the deadline to do this is the 5th October 2020. Also you will have to submit a tax return every year by the 31st January of each following year.

To make things easier on your part you can appoint an accountant to submit these on your behalf. They can even help reduce your tax liability by helping you claim on allowances that you might not be aware of. Your only responsibility as a sole trader will be to provide your accountant with the necessary paperwork and information as they request it.

Paying Tax

Just like regular employment you will have to pay income tax and national insurance on your profits. This is to be paid on 31st January following the Tax year. If you earn £25,000 – £30,000 it would be worthwhile trading as a limited company. For more information on this please see our other guides.

Employing Staff as A Sole Trader

If you would like to employ staff as a sole trader, then there are legal obligations that you must follow. You should pay your staff at least the rate of minimum wage for their age (£8.72 an hour for over 25).

If your staff are earning more than £833 a month you will also have to provide a company pension that both you the employer and the employee has to pay into. The current minimum rates are 5% for employees and 3% for employers. As mentioned above if you appoint an accountant, they can manage all of this on your behalf.

Sole Trader Legal Obligations