Why does the director not want to take you on as an employee on a short term contract? This sounds the more logical arrangement.

aunty as island says, self-employed and sole trader are the same thing for an individual. Catch is that the Revenue don't like people being self-employed if they only work for one person/company.

Of course if you set up self-employed there's a very good chance that you might only have one client for a while, so the important thing is, are you willing to take, and available for, other contracts?

If you tell the Revenue (if they ask - they never asked me or my DH) that you only work for this person and hope to be employed by them at the end, they may have a problem and effectively stop you getting the work (unless your friend agrees to take you onto their books).

You should be fine with what you're doing but you do need to register as self-employed with the Revenue. You will need to pay your own NI. If you earn more than late 60s (I think that's the limit:check) you need to register for VAT as well. Look on the Inland Revenue website.

A sole trader is self employed. You need to let the Inland Revenue know.

There are certain criteria as to whether you can be classed as self employed. You have to be able to answer yes to these questions.

•Can you hire someone to do the work or engage helpers at your own expense?

•Do you risk your own money?

•Do you provide the main items of equipment you need to do your job, not just the small tools that many employees provide for themselves?

•Do you agree to do a job for a fixed price regardless of how long the job may take?

•Can you decide what work to do, how and when to do the work and where to provide the services?

•Do you regularly work for a number of different people?

•Do you have to correct unsatisfactory work in your own time and at your own expense?

Go onto www.businesslink.gov.uk

There's pages and pages of information about how you can set up your business, and also helps with what you need to be aware of, how the company should be registered, what to tell HMRC and lots of other interesting stuff. Good luck.

I am just about to start work for a very small consultancy business - no employees, just a director. I will be working three days a week and I will be invoicing the company for those three days.

Do I need to be registered as self employed, or a sole trader? It will be a realtively short term thing as after six months I'll get the director to take me on permanently if it's all working out.

If someone could point me in the right direction I'd appreciate it!

Thanks in advance x