Setting up as a self-employed is the simplest and quickest way to start a one-person business. There isn’t much paperwork to do. Record keeping and accounting is straightforward, and there are the benefits of being your own boss.
As a sole trader you will have to pay income tax on any profits from your business. You must fill in a self-assessment tax return each year, detailing your income and expenses.
You will have to make flat-rate Class 2 National Insurance Contributions (NICs) throughout the year - £2.40 a week for 2010/11. If your annual profits are over a certain amount - £5,715 for 2010/11 – you will also have to pay Class 4 NICs. You pay these along with your income tax – the amount you have to pay is calculated from your self-assessment tax return.
