Frequently asked questions & answers in full

1

What does it mean to be self-employed?

This means exactly what it says – you work for yourself! People become self-employed for many reasons. For example, managing their own time, having more independence, being able to continue with their creative work. The main difference between being employed and self-employed is that when you are employed by a company, tax is automatically taken out of your weekly or monthly payments (this is called PAYE and you can see it on one of your payslips). However, when you are self-employed, each year you are responsible for completing a Self-Assessment tax return, so that the HMRC (formerly the Inland Revenue) can work out how much tax you need to pay them. It is important that you remember to pay your tax correctly or you might need to pay a fine.

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And remember...
If you’re self-employed then you’re solely responsible for paying your taxes, on time. Make sure you’ve got the key deadline dates in your diary.
2

What do I need to become self-employed?

Registering as a sole trader is one of the most common ways for new businesses to set themselves up, because it is the quickest and easiest to do. You need to register with HMRC within 3 months of receiving money from any work, or you might need to pay a fine. For more information on how to register, visit www.hmrc.gov.uk/startingup. Also, remember that when you are self-employed, each year you will need to complete a Self-Assessment tax return and pay your tax on time. There are also other ways that you can set up a business, such as a Partnership or Limited Company. These are different to being a Sole Trader and there is more information about these on the ECCA website.

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And remember...
If you’re stuck on what you need to do to register as self-employed, the HMRC have a Helpline for the Newly Self-Employed – give them a call.
3

Am I free-lancing or running a business?

You might have heard the terms ‘freelancing’ or ‘running a business’ and wonder what the difference is. In fact there is not much difference, it’s just the way that you view yourself. When you are freelancing, it might be that you do one-off project work for a company, but under their name. It’s a very flexible way of working and is based very much on the skills you have. When you are running your own business, you might take a bit more control over the work that you do, making sure you have your very own distinct identity and you develop your own projects. But whatever term you choose to use, you are still self-employed, as long as you have set yourself up as a Sole Trader!

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And remember...
If you call the shots about what work you take on and when, then it doesn’t matter what you call yourself, you’re self-employed.
4

Could I work for someone while being self-employed at the same time?

It is perfectly legal to be employed by somebody and be self-employed at the same time. This is one of the ways you might start to build your portfolio career. You would still need to complete a Self-Assessment tax return at the end of the year for the money you have earned through your self-employment. The important thing is to keep good records of everything, so that you know how much is coming in and going out. You might even consider setting up a separate bank account to help you keep track more easily, and you should also keep and file all of the receipts from purchases for your business.

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And remember...
Be a hoarder – make sure you keep a hold of all receipts and records of all your transactions and activities.
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