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How to Register as a Freelancer in the UK
May 22, 2023
A freelancer is a professional who works for themselves. Being a freelancer offers many benefits, such as flexibility, independence, and the ability to work on your own terms. Freelancers search for clients and set their own schedules. Employers find it more profitable to hire freelancers because it saves them time and money on hiring staff.
If you want to set out on this career in the UK, our blog post will guide you through the process of registering as a freelancer and getting started.
Who Is a Freelancer?
The term “freelancer” refers to an independent contractor who offers their services to different clients. Freelancers can have many projects at once and are paid for the work they do.
Compared to full-time employees, freelance specialists are not bound to one organisation, have greater flexibility and freedom to choose their clients, and offer services on an as-needed basis. Their formal relationships with clients are usually contractual, but this depends on the agreement made.
Also, read the article “How to Determine Your Freelance Rates”.
A Step-by-Step Guide to Registering as a Freelancer in the UK
Regardless of which area you are interested in, you need to follow the local laws, namely employment legislation. There are several steps a freelancer usually takes to register in the UK. Below we look at what you need to go through to be officially considered a freelancer in Britain.
Step 1: Choose Your Legal Structure
The first thing you should do is to decide on the legal structure of your business. Even if you are a freelancer, there are several options. For example, you can operate as a sole trader or as a limited company. These structures have different tax obligations and administrative requirements. Look at the level of responsibility and the specifics of registration before you start your business.
Step 2: Register with HMRC
If you choose to go the freelance route, you must register with HM Revenue & Customs (HMRC) as self-employed (a sole trader) or a limited company. Submit an application online through the HMRC website or fill in a paper form. Digital technology can help you get a response a little quicker. You will need to provide personal details – your address, National Insurance Number, and details of your business activities.
Step 3: Set Up a Unique Trading Name (Optional)
If you want to operate as a self-employed person, you need to decide whether you will operate under your own name or choose a unique trading name or a trade mark. Such a name is easier to remember, and it will distinguish your business from the competition.
The business name you come up with should not be the same as one already registered. You can check this on the gov.uk website. There is a list of restrictions; namely, you cannot have a name that includes sensitive words included in the regulations, offensive words, or words that are “the same” as an existing name in the index.
Step 4: Know Your Tax and National Insurance Obligations
As a freelancer, you are responsible for managing your tax and National Insurance contributions. Familiarise yourself with the UK tax system and the different types of tax applicable to freelancers, including self-employed income tax and NI. You must pay income tax on earnings that exceed the Personal Allowance of £12,570 a year.
Also, HMRC considers a number of costs as allowable expenses that you may deduct from your taxable income. Be organised and keep records of your income and expenses to make it easier to file accurate tax returns. Read more about the UK freelance tax system in the Payrow blog.
Step 5: Register for VAT
Consider value-added tax (VAT) registration, if applicable. If your annual turnover exceeds £85,000 per year, you may be required to register for VAT. The current threshold is subject to change, so check the actual data. However, even if you don’t meet the threshold, voluntary registration may be beneficial. It allows you to reclaim VAT on eligible business expenses.
Step 6: Stay Compliant with Legal Requirements
You need to comply with legal and regulatory obligations. Learn about data protection laws, intellectual property laws, contracts, and any industry regulations that may apply to your freelance work.
In addition to the taxes we mentioned above, you may be required to pay additional fees or penalties. This depends on the nature of your business and where you are located. For example, if you operate commercial premises, you may be required to pay business rates, or you may be required to pay for business licences or permits.
Step 7: Open a Business Bank Account
Separate personal and business finances for effective financial management. Many say it is a must when starting a business. It improves your professional image and helps to manage taxes and take a business credit to obtain working capital for your business.
Open a dedicated business bank account to separate your freelance income and expenses. This will make bookkeeping much easier. Consider using Payrow, a service specifically designed to meet the needs of freelancers. Payrow offers a number of features and benefits that allow freelancers to manage their finances efficiently.
How Payrow Can Be Helpful to You
We know how to make business-related processes simple and manageable. Let’s have a look at the benefits you get when working with the Payrow platform.
Streamline Invoicing and Payments
Easily send invoices to your customers and track the progress of payments; this can be done in a couple of clicks. Create notifications for upcoming payments to make sure funds are sent on time.
Make payments automatically, without the need for manual data entry, when you have a repeat transaction. Make payments for free using an international business account from Payrow.
Expense Tracking and Tax Management
Track your business expenses with ease and categorise them for convenient tax documentation. Payrow’s intuitive and user-friendly interface makes it simple to manage deductible expenses, easing the stress of tax season.
Insights and Reporting
Get insights into your financial performance with Payrow’s comprehensive reports and analytics. With these, you’ll have a clear view of your revenue streams. You’ll be able to identify trends and make informed choices to expand your freelance business.
As a freelancer, your options are endless, and Payrow’s services will help you easily accept payments from clients around the world. Our online solutions provide seamless payment acceptance for international clients, automation of reporting, and document management. These indispensable features meet the needs of freelancers.
Make freelancing simple with Payrow!
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