How to Prepare Your Small Business to Hire Employees: A Step-by-Step Guide
Employing your first team memebr is an exciting milestone for any small business – a real sign of growth. But before you dive into recruitment, there are a few essential things you’ll need to have in place. This will not only ensure your business is legally compliant but will also set you up for a smooth transition into the world of people management.
We’ve put together this easy-to-follow guide to walk you through the key steps. Get these sorted, and you’ll be ready to recruit with confidence, avoiding any costly mistakes down the road.
For a quick overview, you can also download our FREE cheatsheet that breaks each step down simply, and provides some extra resources to help you take action on each step.
Step 1: Register as an Employer with HMRC
First things first – you’ll need to register as an employer with HM Revenue and Customs (HMRC). This is a must, as it allows you to run a Pay As You Earn (PAYE) scheme, which is how you’ll deduct Income Tax and National Insurance from your employee’s pay.
Important Note: Make sure to register at least four weeks before paying your first employee.
Step 2: Set Up a Payroll Process
Managing employee pay is a bit more than just transferring money – you’ll also need to handle tax deductions, National Insurance, and more. Whether you choose to manage payroll yourself or outsource to a professional, getting this right is key to keeping things running smoothly.
Pick payroll software or work with an accountant to handle wages, taxes, and overtime.
Get familiar with Real Time Information (RTI) reporting to HMRC to ensure you stay compliant.
Step 3: Buy Employer’s Liability Insurance
As soon as your first employee arrives at work, you’ll need employer’s liability insurance. This protects your business from any claims made by employees who are injured or fall ill due to their work.
Look for a policy that offers the right level of cover for your type of work your employees do
Make sure the certificate is displayed where employees can easily see it.
Step 4: Create Employment Contracts
Each employee must receive a written contract before their first day. This contract should clearly lay out the details of their job, pay, hours, and other key terms.
Draft a contract that covers the basics: salary, hours, holidays, and probation periods.
Don’t forget to include legally required policies, such as disciplinary and grievance procedures.
If you’re not sure where to start, use a template or get professional advice to ensure compliance. This is something we can help with!
Step 5: Set Up a Workplace Pension Scheme
By law, you’re required to provide a workplace pension for your employees through a process called auto-enrolment. This means choosing a pension scheme that meets the requirements and making sure both you and your employee contribute correctly.
Pick a pension scheme that’s compliant with auto-enrolment rules.
Understand the contribution rates required for both employer and employee, and make sure everything is communicated clearly to your team in a way that complies with the legislation
Now You’re Ready to Recruit!
Once these steps are in place, you’ll be set to start your recruitment process, knowing your business is fully prepared for its first employee.
Conclusion
Getting everything sorted before you hire doesn’t just keep you compliant – it helps you build a strong foundation for your team’s success. From registering with HMRC to sorting out contracts and pensions, a bit of preparation goes a long way. Now, you’re ready to take your business to the next level with confidence.
You can download our FREE Employing Your First Person Cheat Sheet.
It breaks each step down simply, and provides some extra resources to help you take action.
Just submit the form below and we will send you the link!
Alternatively if you would like to get some more hands on help with this process, then get in touch