{"id":1041,"date":"2021-10-22T00:00:00","date_gmt":"2021-10-22T00:00:00","guid":{"rendered":"https:\/\/www.simplybusiness.co.uk\/knowledge\/articles\/side-hustle-legal-obligations\/"},"modified":"2025-07-11T10:26:10","modified_gmt":"2025-07-11T10:26:10","slug":"side-hustle-legal-obligations","status":"publish","type":"knowledge","link":"https:\/\/www.simplybusiness.co.uk\/knowledge\/starting-out\/side-hustle-legal-obligations\/","title":{"rendered":"What are my legal obligations when running a side business?"},"content":{"rendered":"\n<p class=\"wp-block-paragraph\">Thinking about setting up a side hustle but aren\u2019t sure about your legal obligations? We\u2019ve worked with Arag to create this guide, which gives an overview of the legal obligations involved with running a side business.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"> Arag is our business legal expenses insurance provider and they\u2019re experts in justice and legal services for both individuals and businesses.<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li class=\"wp-block-list-item\"><a href=\"\/knowledge\/starting-out\/trending-business-ideas\/\" data-type=\"knowledge\" data-id=\"1344\"><strong>Best small business ideas to start in the UK<\/strong><\/a><\/li>\n\n\n\n<li class=\"wp-block-list-item\"><a href=\"\/knowledge\/starting-out\/how-to-start-a-business\/\" data-type=\"knowledge\" data-id=\"1444\"><strong>How to start a business<\/strong><\/a><\/li>\n\n\n\n<li class=\"wp-block-list-item\"><a href=\"\/knowledge\/starting-out\/how-to-become-self-employed\/\" data-type=\"knowledge\" data-id=\"1418\"><strong>How to go self-employed in the UK<\/strong><\/a><\/li>\n\n\n\n<li class=\"wp-block-list-item\"><a href=\"\/business-insurance\/faq\/what-is-business-insurance\/\"><strong>What is business insurance?<\/strong><\/a><\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"runningasidebusinesswhataboutmymainjob\">Running a side business: what about my main job?<\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">If you\u2019re an employee, you have an obligation not to compete with your employer. This is governed by common law, under the implied duty of fidelity (essentially, the duty of good faith or loyalty).<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Some employers will often include express terms in your <a href=\"\/knowledge\/staff\/employment-contract-template\/\" data-type=\"knowledge\" data-id=\"1379\">employment contract<\/a> saying that you can\u2019t compete with them. Your contract might also say that you need to ask their permission to start a side hustle.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">If you start a side hustle that competes with your employer, they\u2019ll see this as a conduct issue and it could end in your dismissal.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">So, before starting a side hustle alongside your main job, check your employment contract to see whether you need to get permission. If you\u2019re not in competition with your employer, then they shouldn\u2019t unreasonably refuse permission.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Your employer might still have concerns that your side hustle will impact your weekly rest in terms of working time. <a href=\"\/knowledge\/staff\/working-time-directive-breaks\/\" data-type=\"knowledge\" data-id=\"1595\">Working time regulations<\/a> set out how much rest and time off employees should have between working.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"aretherelicensesineedtostartasidebusiness\">Are there licenses I need to start a side business?<\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">This depends on the side hustle you want to start.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">All businesses need to follow legislation that governs what you can and can\u2019t do when it comes to selling goods and services. It\u2019s best that you find out what obligations are in place for your industry, including whether you need any <a href=\"\/knowledge\/management\/business-licence-uk-guide\/\" data-type=\"knowledge\" data-id=\"1354\">business licences<\/a>.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">You should do this before you start trading to avoid action from your local authority, the police, or the health and safety executive.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"whatsidehustleinsurancedoineed\">What side hustle insurance do I need?<\/h2>\n\n\n\n<div id=\"nba-body-001\">\n<\/div>\n\n\n\n<p class=\"wp-block-paragraph\">It\u2019s important that you think about business insurance before starting your side hustle.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">The main covers include:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li class=\"wp-block-list-item\"><a href=\"\/business-insurance\/public-liability-insurance\/\">public liability insurance<\/a> \u2013 this covers you if a member of the public gets injured or loses out financially and blames your side hustle<\/li>\n\n\n\n<li class=\"wp-block-list-item\"><a href=\"\/business-insurance\/professional-indemnity-insurance\/\">professional indemnity insurance<\/a> \u2013 if you give advice or provide a service to clients, this protects you if your client loses money because of bad advice, services or designs<\/li>\n\n\n\n<li class=\"wp-block-list-item\"><a href=\"\/business-insurance\/employers-liability-insurance\/\">employers\u2019 liability insurance<\/a> \u2013 if you grow your side hustle and eventually you decide to take on staff, you\u2019re legally required to have employers\u2019 liability insurance<\/li>\n<\/ul>\n\n\n\n<p class=\"wp-block-paragraph\">If you\u2019re <a href=\"\/knowledge\/starting-out\/how-to-start-a-home-business\/\" data-type=\"knowledge\" data-id=\"1015\">running a business from home<\/a>, it\u2019s a good idea to get in touch with your home insurer as you might not be covered for business activities.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">If you want to become a member of a professional body, they might require you to have business insurance. Some venues and suppliers might also require you to have insurance as part of your contract with them.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"whatlegalstructureshouldichooseformysidehustle\">What legal structure should I choose for my side hustle?<\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">There are three types of legal structure:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li class=\"wp-block-list-item\">sole trader<\/li>\n\n\n\n<li class=\"wp-block-list-item\"><a href=\"\/knowledge\/business-structure\/what-is-a-general-business-partnership\/\" data-type=\"knowledge\" data-id=\"938\">partnership<\/a><\/li>\n\n\n\n<li class=\"wp-block-list-item\"><a href=\"\/knowledge\/business-structure\/setting-up-a-limited-company\/\" data-type=\"knowledge\" data-id=\"1270\">limited company<\/a><\/li>\n<\/ul>\n\n\n\n<p class=\"wp-block-paragraph\">Setting up as a sole trader is very easy. Once you <a href=\"\/knowledge\/business-structure\/register-as-self-employed\/\" data-type=\"knowledge\" data-id=\"1501\">register as self-employed with HMRC<\/a> and start trading as an individual, you\u2019ll be classed as a sole trader. There\u2019s not much paperwork and there aren\u2019t many legal obligations. The main disadvantage is that sole traders are personally liable for all debts, meaning your own assets (including your home and your savings) are at risk if you can\u2019t pay your business debts.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">If you\u2019re setting up your business with someone else, you can register as a partnership. Someone will have to be the \u2018nominated partner\u2019 who deals with business records and tax returns. There are three types of partnerships. An \u2018ordinary partnership\u2019 has fewer obligations than limited partnerships and limited liability partnerships (LLPs), which are more like limited companies.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Finally, if you set up a limited company, your personal assets are separate from business assets. This means they can\u2019t be used for any business debts. While this is a big advantage, setting up and running a limited company has a lot of initial and ongoing legal obligations.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Read more about the differences of a <a href=\"\/knowledge\/starting-out\/sole-trader-vs-limited-company\/\" data-type=\"knowledge\" data-id=\"1532\">sole trader vs a limited company<\/a>.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"whataboutsidebusinesstaxintheuk\">What about side business tax in the UK?<\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">You need to pay tax on your earnings. Employees pay income tax through PAYE, but if you make money from a side hustle, this is classed as self-employed income and you need to report it to HMRC.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Sole traders and business partnerships pay <a href=\"\/knowledge\/business-tax\/income-tax-rates\/\" data-type=\"knowledge\" data-id=\"1464\">income tax<\/a>. They need to <a href=\"\/knowledge\/business-structure\/register-as-self-employed\/\" data-type=\"knowledge\" data-id=\"1501\">register as self-employed with HMRC<\/a> and send an annual <a href=\"\/knowledge\/business-tax\/self-employed-tax-changes\/\" data-type=\"knowledge\" data-id=\"1514\">Self Assessment tax return<\/a>.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Limited companies pay <a href=\"\/knowledge\/business-tax\/when-is-corporation-tax-due\/\" data-type=\"knowledge\" data-id=\"1592\">corporation tax<\/a>.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">There are <a href=\"\/knowledge\/self-assessment\/self-employed-expenses\/\" data-type=\"knowledge\" data-id=\"1511\">business expenses<\/a> you can deduct from your profits to calculate your total taxable income. But tax is complex, so if possible, speak to a professional accountant or tax adviser to understand more.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Read more about <a href=\"\/knowledge\/self-assessment\/tax-on-second-job\/\" data-type=\"knowledge\" data-id=\"1546\">paying second job tax<\/a>.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"whataboutmysidehustlesintellectualpropertyip\">What about my side hustle\u2019s intellectual property (IP)?<\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">Intellectual property (IP) is what you artistically create, including brand names, songs, new inventions, or symbols.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Developing your new product, service or brand is important to the success of your business, as it helps to make you distinct from your competitors. You should therefore think about protecting your creations.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">And from the other perspective, you should make sure that you\u2019re not infringing on another business\u2019s brand, product or logo to help boost your own business.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Both small and big businesses will try hard to protect their IP, so research this before trading. IP is often registered (for example through trademarks or patents). You can <a href=\"https:\/\/www.gov.uk\/search-for-trademark\" rel=\"noopener noreferrer\" target=\"_blank\">search for a trade mark here<\/a>.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><a href=\"\/knowledge\/business-structure\/what-is-intellectual-property\/\" data-type=\"knowledge\" data-id=\"976\">Read more about intellectual property<\/a>.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"howlegalexpensesinsurancecanhelp\">How legal expenses insurance can help<\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">Legal protection insurance covers business legal expenses or prosecution fees for situations like employment tribunals, HMRC tax investigations, or civil actions brought under the Data Protection Act.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">If you have <a href=\"\/landlord-insurance\/landlord-legal-expenses-insurance\/\">legal expenses insurance<\/a> as part of your Simply Business policy, you also have access to a number of useful services through <a href=\"https:\/\/www.aragbusinesslaw.co.uk\/\" rel=\"noopener noreferrer\" target=\"_blank\">Arag Businesslaw<\/a> (you\u2019ll just need your voucher code found in your policy documents to register).<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Arag has a legal advice helpline, available whether you\u2019re facing a serious legal issue or just want to check something with an adviser. They also offer a range of legal templates and guides.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Photograph 1: Nata Bene\/stock.adobe.com<\/p>\n\n\n\n<div class=\"wp-block-group has-azure-200-background-color has-background has-global-padding is-layout-constrained wp-container-core-group-is-layout-94e519ba wp-block-group-is-layout-constrained\" style=\"padding-top:var(--wp--preset--spacing--80);padding-right:var(--wp--preset--spacing--40);padding-bottom:var(--wp--preset--spacing--80);padding-left:var(--wp--preset--spacing--40)\">\n<h3 class=\"wp-block-heading has-text-align-center\" id=\"readytosetupyourcover\">Ready to set up your cover?<\/h3>\n\n\n\n<p class=\"has-text-align-center wp-block-paragraph\">As one of the UK&#8217;s biggest <a href=\"\/business-insurance\/\" data-type=\"page\" data-id=\"5152\">business insurance<\/a> providers, we specialise in <a href=\"\/business-insurance\/public-liability-insurance\/\">public liability insurance<\/a> and protect more trades than anybody else. Why not take a look now and build a quick, tailored quote?<\/p>\n\n\n\n<div class=\"wp-block-buttons is-content-justification-center is-layout-flex wp-container-core-buttons-is-layout-a89b3969 wp-block-buttons-is-layout-flex\">\n<div class=\"wp-block-button\"><a class=\"wp-block-button__link wp-element-button\" href=\"https:\/\/quote.simplybusiness.co.uk\/business\">Start your quote<\/a><\/div>\n<\/div>\n<\/div>\n\n\n\n<div id=\"nba-body-end\">\n<\/div>\n","protected":false},"excerpt":{"rendered":"<p>When setting up a side hustle, you\u2019re setting up a business, so you have some legal obligations. Here\u2019s a guide on what to check off your list. Read more.<\/p>\n","protected":false},"author":3,"featured_media":3583,"comment_status":"open","ping_status":"closed","template":"","meta":{"sb_hreflang":"","sb_hreflang_url":"","disable_breadcrumbs":false,"sb_breadcrumbs":[],"sb_reviewed_by":"","sb_review_date":"","sb_enable_content_gating":true,"footnotes":""},"categories":[336,110,339],"hidden-category":[],"coauthors":[26],"class_list":["post-1041","knowledge","type-knowledge","status-publish","has-post-thumbnail","hentry","category-business-structure","category-business-news","category-starting-out"],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v27.2 (Yoast SEO v27.2) - https:\/\/yoast.com\/product\/yoast-seo-premium-wordpress\/ -->\n<title>Running a side business: what are my legal obligations?<\/title>\n<meta name=\"description\" content=\"When setting up a side hustle, you\u2019re setting up a business, so you have some legal obligations. Here\u2019s a guide on what to check off your list. Read more.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.simplybusiness.co.uk\/knowledge\/starting-out\/side-hustle-legal-obligations\/\" \/>\n<meta property=\"og:locale\" content=\"en_GB\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"What are my legal obligations when setting up (and running) a side hustle?\" \/>\n<meta property=\"og:description\" content=\"Read this guide if you\u2019re not sure about your legal obligations.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.simplybusiness.co.uk\/knowledge\/starting-out\/side-hustle-legal-obligations\/\" \/>\n<meta property=\"og:site_name\" content=\"Simply Business UK\" \/>\n<meta property=\"article:publisher\" content=\"https:\/\/www.facebook.com\/simplybusiness\" \/>\n<meta property=\"article:modified_time\" content=\"2025-07-11T10:26:10+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/www.simplybusiness.co.uk\/wp-content\/uploads\/sites\/3\/2024\/06\/side-hustle-legal-obligations.jpg\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:title\" content=\"What are my legal obligations when running a side business?\" \/>\n<meta name=\"twitter:site\" content=\"@simplybusiness\" \/>\n<meta name=\"twitter:label1\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data1\" content=\"6 minutes\" \/>\n\t<meta name=\"twitter:label2\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data2\" content=\"Sam Bromley\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"Article\",\"@id\":\"https:\/\/www.simplybusiness.co.uk\/knowledge\/starting-out\/side-hustle-legal-obligations\/#article\",\"isPartOf\":{\"@id\":\"https:\/\/www.simplybusiness.co.uk\/knowledge\/starting-out\/side-hustle-legal-obligations\/\"},\"author\":{\"@type\":\"Person\",\"name\":\"Sam Bromley\",\"description\":\"\\nSam has more than 10 years of experience in writing for financial services.\u00a0He specialises in illuminating complicated topics, from IR35 to ISAs, and identifying emerging trends that audiences want to know about.\u00a0Sam spent five years at Simply Business, where he was Senior Copywriter.\"},\"headline\":\"What are my legal obligations when running a side business?\",\"datePublished\":\"2021-10-22T00:00:00+00:00\",\"dateModified\":\"2025-07-11T10:26:10+00:00\",\"mainEntityOfPage\":{\"@id\":\"https:\/\/www.simplybusiness.co.uk\/knowledge\/starting-out\/side-hustle-legal-obligations\/\"},\"wordCount\":1148,\"commentCount\":0,\"publisher\":{\"@id\":\"https:\/\/www.simplybusiness.co.uk\/#organization\"},\"image\":{\"@id\":\"https:\/\/www.simplybusiness.co.uk\/knowledge\/starting-out\/side-hustle-legal-obligations\/#primaryimage\"},\"thumbnailUrl\":\"https:\/\/www.simplybusiness.co.uk\/wp-content\/uploads\/sites\/3\/2024\/05\/side-hustle-legal-obligations.jpg\",\"articleSection\":[\"Business structure\",\"Small business news\",\"Starting out\"],\"inLanguage\":\"en-GB\",\"potentialAction\":[{\"@type\":\"CommentAction\",\"name\":\"Comment\",\"target\":[\"https:\/\/www.simplybusiness.co.uk\/knowledge\/starting-out\/side-hustle-legal-obligations\/#respond\"]}]},{\"@type\":\"WebPage\",\"@id\":\"https:\/\/www.simplybusiness.co.uk\/knowledge\/starting-out\/side-hustle-legal-obligations\/\",\"url\":\"https:\/\/www.simplybusiness.co.uk\/knowledge\/starting-out\/side-hustle-legal-obligations\/\",\"name\":\"Running a side business: what are my legal obligations?\",\"isPartOf\":{\"@id\":\"https:\/\/www.simplybusiness.co.uk\/#website\"},\"primaryImageOfPage\":{\"@id\":\"https:\/\/www.simplybusiness.co.uk\/knowledge\/starting-out\/side-hustle-legal-obligations\/#primaryimage\"},\"image\":{\"@id\":\"https:\/\/www.simplybusiness.co.uk\/knowledge\/starting-out\/side-hustle-legal-obligations\/#primaryimage\"},\"thumbnailUrl\":\"https:\/\/www.simplybusiness.co.uk\/wp-content\/uploads\/sites\/3\/2024\/05\/side-hustle-legal-obligations.jpg\",\"datePublished\":\"2021-10-22T00:00:00+00:00\",\"dateModified\":\"2025-07-11T10:26:10+00:00\",\"description\":\"When setting up a side hustle, you\u2019re setting up a business, so you have some legal obligations. 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