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Starting out

Now you are trading, be it through a sole trade, a partnership or an LLP, what do you need to do next?

Sole Trader

First, you need to register your business with HMRC – click here for the link.

Next, your accountant, tax agent or adviser acting on your behalf, will need to apply to HMRC to act as your agent. There are a couple of ways of doing this – the easiest is to appoint them as part of your self-employment registration above. Alternatively, the agent can enter certain information into the HMRC Portal. HMRC will then send you a code in the post, which you need to pass to your agent. The agent will then enter the code into the HMRC portal. The third option is a paper form 64-8.

National Insurance contributions are paid by everyone who works and allow you to be paid the state pension, state benefits and to receive free healthcare. As a self-employed person you will pay Class 4 contributions. It used to be both Class 2 and Class 4, but class 2 has been abolished from 6 April 2024.

Class 4 NICs are calculated as a percentage of your annual business profits, but you only start to pay class 4 once your profits exceed a limit. Class 4 NICs are calculated and paid over as part of the self-assessment function.

If you pay too much NIC you can always put in a claim for a refund if your profits turn out to be lower than expected, and if you also pay class 1 National insurance because you have a part time job for example, then you can apply to defer your class 2 and class 4 NICs until the end of the tax year.


You need to use a form SA400 to register a new partnership, and SA401 to register a partner for self-assessment.

The form SA401 is then used to add each individual partner to the partnership.

Limited Companies

If you choose to trade through a limited company, you will need to register the company with Companies House first. As part of this process Companies House then inform HMRC of the Companies details.

A director of a limited company is treated as an employee and therefore does not need to pay Class 4 NIC’s. There is also no longer a requirement to complete a self-assessment tax return, unless income levels dictate it.

Should you wish to discuss this further please do not hesitate to contact us.

(Updated January 2024)

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