As your new business grows, you’ll inevitably need to take on some employees. Having more hands at the pump helps you scale up, delegate tasks and broaden the scope of your operations. But what are the important things to get right when employing staff for the first time?
Let’s look at the main responsibilities when becoming an employer.
Registering as an employer
If you employ anyone at a rate of pay above the National Insurance lower earnings limit (£123 per week, £533 per month) you must register as an employer with HMRC. This will mean operating a payroll to pay your employees wages, and applies even if no tax or National Insurance liability actually arises.
- Once you’re liable to register, all your employees must be processed through your payroll system, regardless of amount. It’s a common misconception that casual or weekend staff can be paid ‘cash in hand’ without the payment going through payroll. That’s not the case and all wages must go through the payroll system
- If you’re operating a limited company, directors in the company are considered to be employees in much the same way as anyone else. So, any salary paid to directors must also be processed through the payroll system.
- You will need employers’ liability insurance with minimum cover of £5 million against the risk of your employees becoming injured or ill as a result of working for you.
- None of your employees can be paid below the applicable National Minimum Wage. Some employers have a policy of paying at least the Real Living Wage.
- You should check that your employees have the right to work in the UK and have the required visas and paperwork to do so.
- Where necessary (e.g. if they work with children or vulnerable adults) you should carry out a DBS check on any new employees. This checks their background and criminal record to make sure they are suitable candidates to work with vulnerable people.
- No later than the first day of work, you must provide each employee with a written statement of employment. This must include details of their role, rate of pay and pay interval, holiday entitlement and any probationary period. At the same time, they should be given details of notice periods, sick pay and other statutory paid leave.
- You’ll have an ongoing need to look at your obligations regarding auto-enrolment into a workplace pension scheme. And you must report your payroll information to HMRC regularly, including on or before each payday through the Real Time Information system.
Talk to us about managing your payroll and employee admin
Becoming an employer is good for the business, but does add a whole new layer of employee admin work.There are plenty of associated administrative tasks to be taken care of – and the penalties for getting it wrong can be severe.
We can take care of payroll processing and the reporting to HMRC, to make sure you stay compliant with the regularly changing rules.
If you want to run your payroll inhouse, ask us about a ‘health check’ to give you the peace of mind that everything is in order and looking shipshape.
Get in touch to talk about your payroll needs.