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How do I set myself up as a sole trader or limited company?

If you haven't yet done so, it's important to decide whether to trade as an individual or as a company

Setting up as a sole trader is very simple. Just contact HMRC and register for self assessment by October 5 following the end of your first tax year of self-employment. If you started out in the 2016/2017 tax year, you have until October 5, 2017 to register. Then all you need to do is enter your earnings and business costs each year, and your tax and national insurance contributions will be calculated for you. For the 2016/2017 tax year, if you earn less than £11,000, you won’t need to pay any tax but you do still need to file your tax return.

Forming a limited company is a little more complicated. You’ll need to register with Companies House to get a certificate of incorporation to confirm your company legally exists. You can read up on rules about company names and more at gov.uk (https://www.gov.uk/browse/business/limited-company). You will need to file your annual accounts with Companies House, as well as informing HMRC of your profits and taxable income each year.

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