Week 1: structure and registration
Decide sole trader or limited company
Sole trader: simpler, cheaper to start, taxed at your normal income tax rates. Limited company: more setup, more paperwork, but better tax efficiency above roughly £30-40k profit and better credibility for B2B clients. Most professional freelancers (consulting, development, design, finance) operate as limited companies; most starting freelancers begin as sole traders.
Register with HMRC or Companies House
Sole trader: register for Self Assessment on the HMRC website. You’ll get a Unique Taxpayer Reference (UTR) in the post within 10 working days. Limited company: incorporate at Companies House (online, £50, usually under 24 hours). HMRC is notified automatically; you’ll receive your corporation tax UTR by post.
Week 2: banking and accounting
Open a business bank account
For limited companies, this is legally required (you can’t legitimately commingle company and personal money). For sole traders, it’s strongly recommended. Challenger banks (Tide, Starling Business, Monzo Business) open accounts in 1-3 days online; high-street banks take 1-2 weeks. Most charge £5-£10 per month for the basic tier.
Choose and onboard an accountant
Specialist freelance/contractor accountants charge £80-£150 per month and bundle everything: annual accounts, corporation tax (limited company), Self Assessment (sole trader), payroll (if you pay yourself a salary), VAT returns (once registered), and Companies House confirmation statements. Onboarding usually takes a week of email back-and-forth.
Week 3: tools and templates
Accounting software
FreeAgent, Xero, and QuickBooks are the three main UK options. Most freelance accountants bundle FreeAgent free with their service. The software handles invoicing, expenses, mileage, time tracking, and tax estimates. Set up your bank feed so transactions import automatically.
Invoice and contract templates
Build a basic invoice template in your accounting software (logo, your business details, client details, line items, payment terms, bank details). For contracts, IPSE has free templates for members; the Law Society has templates for general use. Tailor a contract template once for your typical work; reuse it.
Domain and basic website
A simple one-page website with your services, contact details, and a brief about-you is enough for the first year. Cost: £10-£20 for the domain, free hosting via Netlify or Cloudflare Pages, content built in any modern static-site tool. Don’t over-invest in this initially; revisit when revenue is clear.
Week 4: first invoice and insurance
Raise the first invoice
The first invoice is a small moment but a real one. Standard UK terms are 30 days from invoice date; some clients pay faster, some slower. Always include your bank details, the payment due date, your invoice number, the work delivered, and (if VAT registered) your VAT number and the VAT amount.
Basic insurance
Public liability insurance (£100-£300 per year, covers third-party injury or property damage) is standard. Professional indemnity insurance (£150-£500 per year, covers negligence claims for advice or work product) is essential for any advisory or technical work. Some clients require you to evidence both before signing contracts. Buy through any UK business insurance broker.
Things to defer past month 1
- VAT registration (only required at £90,000 turnover)
- Employees or subcontractors (start solo, hire when revenue justifies it)
- Office space (work from home in year 1 unless there’s a specific reason)
- Major brand investment (logo, website redesign, etc.) until you know what you’re building
- Pension setup beyond the basics (set a SIPP up in month 3-6)
Related
- Going freelance after employment
- Setting up a limited company after leaving work
- Becoming a contractor after redundancy
- Self-employment after leaving a job
- Handover plan generator
Frequently asked questions
- What do I need to do in my first month as a freelancer?
- Six things: decide on sole trader vs limited company structure; register with HMRC or Companies House; open a business bank account; choose an accountant; raise your first invoice; arrange basic insurance. Each takes hours, not days. Within a month all of these should be done.
- Do I need an accountant as a freelancer?
- Sole traders below £50,000 of revenue can usually self-serve with accounting software. Limited companies almost always need an accountant because of the multiple filing requirements (annual accounts, corporation tax, payroll, confirmation statement, VAT if registered). Specialist freelance accountants charge £80-£150 per month and bundle the lot.
- How do I find my first freelance client?
- Most first clients come from existing network: ex-colleagues at new companies, former managers, professional contacts who remember your work. A short note explaining you've gone freelance and what you offer, sent to 20-30 specific people, usually produces leads within 2-4 weeks. Job-board freelance work and pitching cold are lower-yield channels.
- Do I need a contract for freelance work?
- Yes, even for small jobs. A simple contract covers scope, payment terms, deliverables, copyright/IP, confidentiality, and termination. Templates are available free from the Law Society, IPSE, and several legal-tech sites. Tailor a template to your needs once and use it for every project.
General information about freelance setup. For tax, insurance and legal questions specific to your circumstances, contact an accountant, broker or solicitor.
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