As your business grows and becomes more successful, you will find a point where it would be beneficial to have some regular help.
Most commonly this would involve employing someone to work for you. Aside from the obvious factors such as what you want the employee to do, there are seven points you must address when it comes to taking on a new employee.
You need to decide on how you pay your employee. Will you pay them weekly, which may be better for cash flow, or monthly, which will require less filing and therefore be more time/cost effective in payroll expenses? Also, do you pay employees on an hourly rate or provide them with a set wage for the year?
Whichever method you use, you need to ensure you are paying them at least the minimum wage, which is £9.50 per hour from the 1st of April 2022 for employees over 23 years old. More details on minimum wage amounts can be found here.
You will need to ensure that your employee is legally allowed to work in the United Kingdom (UK). For most employers this involves checking passports and that the employee is a British citizen. A National Insurance number is also useful for determining someone is legally able to work in the UK. HM Revenue and Customs (HMRC) have a set of questions here to help you know what to ask for.
Disclosure Barring Service (DBS) check
If your business deals with vulnerable people or security you will need to ensure your employees have a DBS check. This will help ensure that you are not allowing potentially harmful people to work for you. More information on DBS checks can be found here.
Make sure you’re insured
All employers must have employer’s liability insurance. Policies must be provided by an authorised insurer and provide at least £5 million worth of cover. Failing to have this insurance can result in a fine of £2,500 per day! You can also be fined £1,000 if you do not have your insurance certificate on display or made available for inspectors to view.
If you employ family members or people who are based abroad, you may not need to have employer’s liability insurance. You can find more information here.
Agree a contract
You must set up a contract to advise the employee of their duties in the position. You also need to let them know what rights and benefits they have with the job. You must provide a written contract if you are employing someone for more than one month.
This must be provided to the employee within two months of the beginning of their employment or if they are to work abroad, before they leave. More details about employment contracts can be found here.
Register as an employer
You need to ensure you register with HMRC as an employer to receive your Pay as You Earn (PAYE) office reference number and accounts office reference number. Without these you will not be able to file information and will possibly end up being fined for failing to do so.
You can file online using the HMRC portal or if you have an accountant, they should be able to file on your behalf. More information about registering online can be found here.
Comply with auto-enrolment
You will have to ensure all staff who are eligible are enrolled into a pension scheme. This mainly applies to staff who are over 22 years old, earn at least £10,000 per year and work in the UK. More information about auto-enrolment can be found here.
If you have any questions regarding the above or about payroll in general, please do not hesitate to contact us.