Starting your own self-employed business is an incredibly exciting time. Whilst you may be full of ideas and buzzing with anticipation for what the future holds, there are a few important things - and possibly legal requirements - that you need to explore and put in place.

These include whether you need to register for self-assessment for tax purposes, whether you need business insurance, and whether you need a separate business bank account. Read on for more information on these three topics.

1. Tax

I've written a detailed guide to tax tips for bloggers and self-employed people which is worth reading alongside this article. It covers record keeping, spreadsheets, how to register for self-assessment with HMRC, and what to set aside each month for tax.

If you are a sole trader and your gross sales from your trades or services are no more than £1,000 per tax year, then you do not legally have to register with HMRC or complete a tax return. This is the trading allowance, and everyone is entitled to one self-employment trading allowance of £1,000. You can read the official guidance at gov.uk to check whether you need to register.

There are still reasons you might want to register even if your gross income is under £1,000, to entitle you to certain benefits such as State Pension contributions. Once your gross income is over £1,000, registration is mandatory. It's straightforward to register online via the HMRC website.

One thing to be aware of if you're approaching higher income levels: Making Tax Digital (MTD) is being rolled out for self-employed people. From April 2026 it applies to anyone with gross income over £50,000, with lower thresholds following in 2027 and 2028. This changes how you submit your income records to HMRC, so it's worth understanding whether it applies to you now or will in the near future.

You can manage your own accounts and tax returns, or hire an accountant to do it for you. I do my own and have done since 2012 - it's very manageable once you have a good system in place.

2. Insurance

Depending on the type of business you plan to run, you may need business insurance, otherwise known as commercial insurance. Many companies offer bespoke business insurance to cover your specific trade, and many even offer home-based business insurance.

If you are selling products, product liability insurance covers you for faulty products or issues arising from anything you sell. If you sell online, specialist ecommerce business insurance is worth looking into.

If you see customers in person, go to trade shows or fairs, or work on client premises, public liability insurance covers accidents involving your customers or damage to their property. Business insurance can also cover equipment from damage and theft - laptops, cameras, tools, stock and business cash. It's definitely worth considering so you're not out of pocket should the worst happen.

There are lots of companies that can offer advice and let you know what cover you need. If you require commercial insurance in Liverpool and the North West, consider contacting Rigby Financial for advice and a quote.

3. Business bank account

You may also want to open a business bank account when starting up. If you are a sole trader, you are under no legal obligation to open an official business bank account. Many business accounts offer tempting fee-free first years but charge after that. It is perfectly fine to use a separate personal bank account for your sole trader transactions - the important thing is keeping business and personal money clearly separate, which makes your accounting much simpler.

One important caveat though: some banks do not allow personal accounts to be used for business purposes in their terms and conditions. If they notice your account is being used for business transactions, they may close it without much warning. It's worth checking the terms of any personal account you plan to use before relying on it for business income and outgoings.

I use the free version of Monzo for my business banking as a sole trader - it does the job well and is easy to manage on the go. If you're interested in signing up, I have a Monzo referral code with a free money offer for new customers which is worth checking out.

If you are a limited company, however, you must open a business bank account to keep company finances separate from your personal finances. Your business is a separate legal entity and cannot use a personal account in its name.

Whether you're a sole trader or limited company, keeping business income and outgoings in a separate account makes it far easier to track your finances, prepare your self-assessment, and understand your real profit. It's a habit worth starting from day one.

Please seek your own professional advice when purchasing business products or services.

If you haven't already, it's also worth reading my guide on going self-employed and how to be financially secure alongside this article.