Working for yourself

If you start working for yourself, you're classed as a sole trader. This means you're self-employed - even if you haven't yet told HM Revenue and Customs (HMRC).

How to tell if you're self-employed

You're probably self-employed if you:

• run your business for yourself and take responsibility for its success or failure
• have several customers at the same time
• can decide how, where and when you do your work
• can hire other people at your own expense to help you or to do the work for you
• provide the main items of equipment to do your work
• are responsible for finishing any unsatisfactory work in your own time
• charge an agreed fixed price for your work
• sell goods or services to make a profit (including through websites or apps)

Many of these also apply if you own a limited company but you're not classed as self-employed by HMRC. Instead you're both an owner and employee of your company.

You can be both employed and self-employed at the same time, for example if you work for an employer during the day and run your own business in the evenings.

You can check whether you're self-employed:

• online with GOV.UK
• by contacting HMRC by phone

Selling goods or services and self-employment

You could be classed as a trader if you sell goods or services. If you're trading, you're self-employed.

You're likely to be trading if you:

• sell regularly to make a profit
• make items to sell for profit
• sell online, at car boot sales or through classified adverts on a regular basis
• earn commission from selling goods for other people
• are paid for a service you provide

You're probably not trading if you sell some unwanted items occasionally or you don't plan to make a profit. You can't use any losses you make as part of a hobby to reduce your tax bill.

For advice if you're not sure whether you're trading, contact HMRC. 

What you need to do if you're self-employed

You'll need to register as self-employed to make sure you pay the correct Income Tax and National Insurance.

You must also follow certain rules on running and naming your business - see set up as a sole trader.

Other ways to work for yourself

There are other business structures apart from being a sole trader. For example, you can:

• become a partner in a business partnership - see how to set up a business partnership
• set up your own limited company - see how to set up a limited company

Free business start-up support

Access free start-up business support from your local council. If you have a great idea but you're not sure how to turn it into a business, or you have already started out in business and require mentorship on your next steps, Go Succeed Start experts will help you to create a business plan, seek funding and put all the foundations in place to get your business up and running.

Complete a short enquiry form or call 0800 027 0639 to register for this free advice and guidance.