If the business is going well, you might have reached the stage where you can no longer run things yourself. As your company grows, chances are you’ll need more help, so it might be on your mind to hire your first employee. Whether you plan on keeping your team small or have grand plans to expand and grow as much as possible, there are certain procedures you need to follow to stay within the law. Here are five considerations.
If you’re going to hire employees, they will, of course, need to be paid. Their payments need to be made on time, in full, and according to the law. As a small business owner in the UK, you can set up payroll for new employees by following these steps:
- Register as an employer with HM Revenue & Customs (HMRC) and obtain a PAYE reference number.
- Set up a payroll system, either by using payroll software or by hiring a payroll service provider.
- Obtain the new employee’s personal information, including their name, address, National Insurance number, and any other required information.
- Withhold and remit Income Tax and National Insurance contributions from the employee’s pay.
- File and pay payroll taxes, including Income Tax and National Insurance, on a regular schedule to HMRC.
- Provide employees with payslips and P60 forms at the end of the tax year.
- Keep accurate records of payroll transactions and employee information.
Health and Safety Training
Employers are legally required to provide a safe and healthy working environment for their employees, so this is something you’ll need to provide when hiring employees. Health and safety training ensures that your employees are aware of the hazards present in their work environment and how to mitigate them, which is crucial to compliance with health and safety regulations. Providing health and safety training can help reduce the cost of workplace injuries and illnesses. This can include direct costs, such as workers’ compensation claims, and indirect costs, such as lost productivity. You can help prevent injuries and illnesses caused by workplace hazards by providing your employees with health and safety training. This can lead to a reduction in the number of work-related accidents and illnesses, resulting in fewer lost workdays and less strain on your company’s bottom line. Even if your workplace is a shop or office or other seemingly ‘safe’ environment, it’s crucial to have employees undertake. Health and safety training is essential for ensuring compliance with laws and regulations, preventing injuries and illnesses, improving productivity, and promoting positive company culture.
As a business owner, you will need to ensure that your employees have General Data Protection Regulation (GDPR) training. This is important for employees because it helps them understand their responsibilities when handling personal data. This includes understanding the risks of handling personal data, such as data breaches, and how to prevent them. Employees need to be aware of the GDPR requirements and how to comply with them to avoid penalties for non-compliance. GDPR training helps employees understand their obligations and the steps they need to take to protect personal data. Companies that are seen to be taking data protection seriously can gain a reputation as responsible and trustworthy businesses, which can help attract and retain customers, so you have your company’s reputation to consider too. This training generally ensures that they are aware of their responsibilities and are equipped with the knowledge and skills necessary to handle personal data in a compliant and secure manner.
UK employers are legally required to provide a pension for their employees as part of the government’s automatic enrolment scheme, which was introduced in 2012. Under this scheme, employers are required to automatically enroll eligible employees into a workplace pension scheme and make contributions to it on their behalf. As the business owner, you are required to automatically enroll eligible employees into a pension scheme and make contributions to it on their behalf unless the employee opts out. Employers are also required to provide certain information to employees about the pension scheme and their rights under the scheme. The minimum contributions required for employers and employees will depend on the size of your company, and so this may change over time, so be sure to keep on top of this. Employers are required to check the worker’s eligibility for auto-enrollment at least every three years and re-enroll those who have opted out of the scheme or whose eligibility has changed. You should consider the costs, investment options, and administrative requirements of the different types of pension schemes when making your decision about which type to choose.
Finally, making a move from a sole trader to a business that has employees will require updating HMRC (or the tax office in your country). In the UK, here’s how you can go about it:
- Register as an employer: You will need to register as an employer with HMRC to inform them that you have employees working in your business. You can do this online by visiting the HMRC website and completing the online registration form.
- Obtain an Employer PAYE reference: When you register as an employer, HMRC will assign you an Employer PAYE (Pay As You Earn) reference, which you will need to use when reporting your employees’ pay and deductions to HMRC.
- Calculate payroll: Your payroll system will calculate and report the pay and deductions of your employees to HMRC.
- Report pay and deductions: You will need to report your employees’ pay and deductions to HMRC on a regular basis, usually every month. You will need to use your Employer’s PAYE reference when making these reports, and you can do this through the HMRC’s Basic PAYE Tools or other software.
- File and pay payroll taxes: You will need to file and pay payroll taxes, including income tax and National Insurance contributions, on a regular basis to HMRC.
- Provide Employees with payslips: You will need to provide your employees with payslips, which should include details of their pay and deductions.
- Keep accurate records: You will need to keep accurate records of your employees’ pay and deductions.
It’s crucial to stay up-to-date and within the law when it comes to managing employees. Thankfully the online systems and tools make this relatively simple to do. You could always outsource or hire an experienced employee to deal with this side of the business for you.
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