So you’ve hired your first employee? What to do next
Getting the ‘people’ part of your business right is a priority for your efficiency and profitability. Finding a suitable candidate that fits your needs as an employer is important, but your efforts will be useless if you’re not complying with the law and doing what you need to do.
Your legal rights and responsibilities as an employer don’t have to be complex or daunting. Let’s take a look at the next steps after you’ve hired your first employee.
Before going forward, it’s worth mentioning the legal requirement of having employer liability insurance before you take on an employee. Failing to do so, you risk facing fines of around £2,500 per day. There are some exceptions where you won’t need cover, including if you don’t deduct income tax or NI payments from their salary. It’s worth checking through the rules carefully.
Ensure you’ve also checked your employee has the right to work in the UK. Once again, failure to do so could make you liable for a fine – this time up to £20,000.
Get tax sorted
After the application process and pre-checks, it’s time to register yourself and your new employee with HMRC.
To register yourself as an employer, you’ll need to fill in the required information and register through a simple government web portal. Give yourself enough time to do this as it takes around two weeks to be confirmed but must be completed before you pay your new worker.
To register your new employee, a full payment submission must be completed. To do this, you need their P45 from their previous employee (if they earn above £111 per week and qualify for PAYE). Don’t forget to take student loans and National Insurance into account either. You have 30 days to register them after their first payment or possibly face a fine of at least £100.
Your employment contract
An employment contract lays out vital information for both parties and is the basis of your new employee’s agreement to work for you.
As an employer, it’s your responsibility to ensure your employee has a contract within two months of working for you. Failure to do so is a breach of employment law and you’d be wise to avoid this at all costs.
It might all seem like a lot to do the first time you’re hiring someone. But remember, your staff are the foundation of your growing business and it’s absolutely essential to start off right to avoid problems down the line.
At Big Hand, we don’t just offer top-class accounting services using state-of-the-art technology. We also have a host of business experts here to give SMEs advice and lead you in the right direction. To find out more, get in touch with us on 0161 327 2911.