How to start a side business: UK, USA, Canada and Australia compared (2026)
Registering, taxes and thresholds for a self-employed side business in the UK, USA, Canada and Australia. A clear overview, plus what to do if your country isn't listed.
By Daniel Nebel Updated on 3 min read
Key points
- In all four countries you can start a side business as a sole trader or sole proprietor without forming a company.
- UK: register as self-employed with HMRC. The first £1,000 of trading income per tax year is tax-free under the trading allowance.
- USA: a sole proprietorship often needs no formal registration beyond a local business licence. Self-employment tax applies once net earnings reach $400.
- Canada and Australia: register for GST/HST or GST only once turnover passes C$30,000 or A$75,000. Below that, you report profits on your personal tax return.
- Rules change and details depend on your situation. For other countries or specific questions, use the contact form at the end of this page.
Starting a business alongside your job is the most realistic way into self-employment for many people. You keep your secure income while building something of your own. This guide gives you an overview of the basics in four English-speaking countries. It is not tax advice, and rules change regularly, so always check the official sources linked below.
Before you start: check your employment contract
Wherever you live, look at your employment contract first. Many contracts require you to disclose other paid work, and some restrict activities that compete with your employer. If your contract says nothing, a short written note to your employer is still a good idea.
United Kingdom
- Registration: Register as self-employed (sole trader) with HMRC. You must do this by 5 October following the end of the tax year in which you started.
- Trading allowance: The first £1,000 of trading income per tax year is tax-free. Below that you don’t even need to register.
- Income tax: Your profit is added to your salary and taxed through Self Assessment. The personal allowance is £12,570.
- National Insurance: Self-employed people pay Class 4 contributions on profits above the threshold. Class 2 is now voluntary.
- VAT: Registration is required once your taxable turnover exceeds £90,000 in 12 months.
- Official source: gov.uk: Working for yourself
United States
- Registration: As a sole proprietor you usually don’t need to register with the federal government. Many cities or counties require a local business licence. If you use a business name other than your own, you may need a “DBA” registration.
- Income tax: Report your business income and expenses on Schedule C with your personal tax return.
- Self-employment tax: If your net earnings from self-employment are $400 or more, you pay self-employment tax for Social Security and Medicare.
- Estimated taxes: If you expect to owe tax, you may need to make quarterly estimated payments.
- Sales tax: Rules vary by state. In direct selling, the company often handles sales tax on orders placed through its online shop.
- Official source: IRS: Self-employed individuals tax center
Canada
- Registration: A sole proprietorship can start in your own name. Some provinces require registration if you use a business name.
- Income tax: Report business income on form T2125 with your personal tax return.
- GST/HST: You must register once your taxable revenue exceeds C$30,000 over four consecutive quarters (the “small supplier” threshold).
- CPP: Self-employed people pay both the employee and employer share of Canada Pension Plan contributions on net earnings.
- Official source: canada.ca: Sole proprietorships
Australia
- Registration: Apply for an Australian Business Number (ABN). It’s free.
- Income tax: As a sole trader you report business income on your individual tax return using your individual tax file number.
- GST: Registration is required once your annual GST turnover reaches A$75,000.
- Super: As a sole trader you aren’t required to pay super for yourself, but you can make voluntary contributions.
- Official source: business.gov.au: Sole trader
At a glance
| UK | USA | Canada | Australia | |
|---|---|---|---|---|
| Structure | Sole trader | Sole proprietor | Sole proprietor | Sole trader |
| Register with | HMRC | Local licence (if required) | Province (if business name) | ABN |
| Tax-free start | £1,000 trading allowance | – | – | – |
| Sales tax threshold | VAT £90,000 | varies by state | GST/HST C$30,000 | GST A$75,000 |
What it costs to start in direct selling
Compared with a traditional business the costs are low: no shop, no stock, no company formation. Besides any registration fees, there is usually a starter package, for example a product set you use yourself. You can find the costs in our FAQ. Prices differ by country.
How it feels to start alongside a full-time job and family is described by Berta, a primary school teacher and mother of four.
Your country isn’t listed?
PM-International operates in many countries. If you live elsewhere or have a specific question about your situation, send us an enquiry with the form below. Tell us your country, and Daniel will get back to you personally with what we know and where to find official information.
Frequently asked questions
Do I need to form a company to start a side business?
No. In the UK, USA, Canada and Australia you can start as a sole trader or sole proprietor in your own name. A limited company or LLC can make sense later, but it isn't needed to start.
Do I have to tell my employer?
Check your employment contract. Many contracts require you to disclose other work, and some restrict competing activities. If in doubt, tell your employer in writing.
My country isn't listed. What now?
PM-International operates in many countries worldwide. Send us an enquiry using the form on this page, tell us your country, and we'll get back to you personally with what we know and where to find official information.
Do I need an accountant?
Not necessarily at the start. With small revenues many people handle their own tax return. An accountant becomes worthwhile once your income grows or your situation gets more complex.
This guide does not replace tax or legal advice. Information without guarantee, as of the update date.
