Starting out as self-employed can feel like a big step but in reality, it’s often simpler than people expect.
Whether you’re planning to go fully self-employed or starting something alongside your current job, understanding the basics early on can make the process much smoother.
Below is a simple overview of what’s involved, along with a few key things to think about before you get started.
What Does Being Self-Employed Actually Mean?
Most people who become self-employed start as a sole trader, the simplest and most common business structure.
As a sole trader:
- You run your business as an individual
- You keep the profits (after tax)
- You’re responsible for managing your finances and tax
You can also be self-employed alongside employment, which is something many people choose to do when starting out.
Getting Set Up: The First Steps
One of the key things you’ll need to do is register with HMRC.
This is done through Self Assessment, which officially registers you as a sole trader. Once registered, HMRC will issue your Unique Taxpayer Reference (UTR), a 10-digit number you’ll use for your tax returns.
You’ll also need to:
- Choose a business name
- Understand your Self Assessment deadlines
- Start keeping records from day one
Keeping Your Finances Organised
Good record keeping is one of the most important parts of being self-employed. You’ll need to keep track of:
- Income received
- Expenses paid
- Receipts and invoices
Many sole traders use cash basis accounting, which means recording income and expenses when money actually moves.
Keeping things organised as you go (rather than at year end) will save time and reduce stress later on.
Invoicing and Getting Paid
When you’re self-employed, you’ll need to invoice your clients correctly. A valid invoice should include:
- Your details and your client’s details
- An invoice number
- The date
- A description of the work
- The total amount and payment terms
Putting a simple invoicing system in place early on can make a big difference, helping you stay organised and avoid unnecessary admin later.
Understanding Tax and Expenses
As a sole trader, you’ll pay:
- Income tax on your profits
- National Insurance contributions
Your tax is based on your profit (income minus allowable expenses), so understanding what you can claim is important.
Allowable expenses can include things like:
- Business insurance
- Software
- Travel for work
- Office equipment
Keeping accurate records of these helps ensure you’re only paying tax on what you actually earn.
Working From Home
If you work from home, you may be able to claim a portion of your household costs, such as electricity, heating and other running expenses.
There are a couple of ways to approach this. You can either work out the actual business use of your home costs, or use HMRC’s simplified flat rate (currently £6 per week), which many people choose for ease.
The key is keeping a clear and reasonable record of how you’ve calculated your claim, so everything is straightforward when it comes to your tax return.
Looking Ahead: Making Tax Digital
Making Tax Digital was introduced from April 2026 and started with sole traders and landlords earning over £50,000. From April 2027, this threshold will reduce to £30,000, meaning it will apply to more people over time.
It brings a shift towards digital record keeping and more regular updates to HMRC every quarter, rather than a single annual submission.
It will likely affect you, if not now then in the next couple of years so putting simple processes in place from the start can make things much easier when the changes apply.
You can find more detail on what this means in practice on our Making Tax Digital page.
Download the Full Guide
This is just a simple overview to get you started.
We’ve put together a more detailed guide covering everything in more depth, including examples, tax rates and step-by-step guidance.
Click here to download our full guide to becoming self-employed
How Venton Can Help
Starting out doesn’t mean you have to figure everything out on your own. At Venton, we support new and growing businesses with:
Whether you’re just getting started or already up and running, we can help you stay organised and confident with your finances.
Get in touch with us HERE.