How to set up as a 'self employed' small business in the UK

Updated: Mar 8


Congratulations for making the decision to start your own business. That's probably the biggest decision you're likely to face, and you've already ticked that one off your list! 🙌 Setting up your new small business as a self employed person is quite straight forward. Here are our top tips on how to set up a small business in the UK...


How to set up a 'self employed' business in the UK

When you start working for yourself you will need to set up as self-employed ('sole trader'). In the UK 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.

What you need to do -

  • Tell HMRC that you're self-employed

  • Decide on your business name

  • Take out self-employed insurance

Registering with HMRC


Registering as self-employed is fairly straightforward. Head to the UK government's online registration portal to register for Self Assessment and Class 2 National Insurance.


Once you're registered, HMRC will send you a letter with your 10-digit Unique Taxpayer Reference (UTR) and will also set up your online account giving you access to a range of digital government services.


Further reading here: https://www.gov.uk/set-up-self-employed


Register online for Self Assessment and Class 2 National Insurance

Naming your business

Many people set up a business in their own name. I personally think that you need to have an independent name from yourself - think resale! If the time did come where you would want to consider selling on your lovely business, it's easier to sell with an independent name rather than attaching your own name (unless of course you're not bothered about selling it on!). So rather than naming your business 'Kat's Cakes' how about 'Bristol Bakes' or instead of Berol's Brownies try 'Brownie Points'? You get the idea!


Here's a fun business name generator to get some ideas: https://businessnamegenerator.com/


Have some fun generating your new business name


Self-employed insurance

I would suggest taking out a self-employed policy that covers Public Liability and (if relevant) Product Liability Insurance for a minimum of £2 million. Some event organisers request minimum £5 million so if you're thinking about selling your products at say a stall at your local farmers market, check with the organisers what level of insurance you'll need.

Why do you need insurance:

  • Public liability protects against any accidents or incidents to the public whilst you're promoting/ selling at public events e.g. market stalls, fayres, fetes etc. and any customers you may have visiting your house/ premises.

  • Product liability protects against any injury or damage caused by any products you manufacture, supply or distribute.

I've done a bit of research on Public liability and Product Liability insurance companies in the UK and the best value policy I could find was £86.11 for an annual 'Self-Employed' insurance deal covering both Public & Product Liability Insurance. This was at Direct Line for Business. Visit their website and complete your details to get a quote to suit you. Other companies are available!

You need to be insured!

Cover yourself for Public Liability and Product Liability Insurance

Other things to consider


Other insurance policies e.g. house insurance, motor insurance...

  • If you haven't 'worked from home' previously, you should also consider contacting your household insurer to make them aware in case your household contents insurance needs to be reviewed. For instance, you may have purchased additional equipment e.g. laptop, office printer, etc... all of which can be added to your household insurance and they'll need to know if you're running a business from home.

  • If you plan to use your personal vehicle for your new business for instance making deliveries, you will need to contact your vehicle insurance company to make sure you're covered for commercial use.

UK VAT

You only need to register for VAT if your turnover is over £85,000. If you hit this and need to register for VAT - well done you! 👏 Here's how to register for VAT in the UK: VAT Registration

TIP!! Tax-Free Childcare

As a self-employed person in the UK you can claim up to £2,000 a year for each of your children to help with the costs of childcare. Yes, that's right! You can use it to pay for approved childcare for example:

  • childminders, nurseries and nannies

  • after school clubs and play schemes

Further reading here: https://www.gov.uk/tax-free-childcare


Claim up to £2,000 a year for each of your children to help with the costs of childcare

Useful Resources

Setting yourself up as self-employed in the UK

Working for Yourself

Tax-Free Childcare



Wishing you the best of luck with your new business 🍀







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