Starting a new business? Get 40% off our accountancy services for 3 months! 😎


If you’re at the point where you need a little help with your business, it might be time to recruit your first member of staff. The business structure that you operate doesn’t affect your ability to become an employer, so even sole traders can hire someone if they need to!

There’s more to being an employer than inviting somebody in and paying them though. The process for becoming an employer can vary depending on what the work is, and who you hire, but there are core points which apply to everyone.

What should I consider before hiring staff?

This can look different for every business, but it’s generally worth asking yourself a few questions:

Can I afford to take someone on?

Employing someone is a commitment, so take a look over the business figures and make sure you can afford to take them on for the duration. The cost of employing someone includes more than just their salary, so other factors might be:

It’s also useful to think about any extra kit you might need, such as computer and desk equipment, tools and machinery, and even training costs.

Use our free online tax calculator to work out how much it costs to employ someone.

Can I afford not to employ someone?

If you’re at maximum capacity and in danger of missing out on terrific opportunities for business growth, it might be time to recruit a helping hand or additional skills and experience.

Would it be better to outsource?

There’s always a moment of worry about whether hiring new staff is the right decision. If you can’t justify taking on an employee, you might consider outsourcing to an external agency or freelancer.

Do you have the physical space to expand?

Additional staff take up additional space – but cramped spaces can actually diminish productivity and aren’t that great for morale either. This might mean you hire remote or hybrid workers to share the space, or simply need to look at a larger workplace.

Although there isn’t a set legal process for hiring someone, it’s your responsibility as an employer to ensure your recruitment process is fair and avoids discrimination. You can advertise the role yourself or through a recruitment agency, but it’s essential the advert avoids any potentially discriminatory language.

It can be helpful to prepare a recruitment policy so that your process for reviewing, selecting, and interviewing candidates is applied consistently.

Once you select who to hire, you’ll need to check that they’re allowed to work for you before you can employ them.

The first step is to check the applicant has the right to work in the United Kingdom with you as their employer. Harsh penalties await those who fail to carry out the appropriate checks and are found to employ illegal workers:

  • Fines can be as much as £20,000 per illegal worker
  • Employers knowingly employing individuals without the right to work in the UK can face jail time of up to five years

Employers will usually need a sponsor licence to employ someone from outside the UK, although there are exceptions to this.

You may also want to run a Disclosure and Barring Service (DBS) search to check the criminal record of somebody applying for a role. This is a requirement if you are hiring within the health care or childcare sectors.

You will need to ensure you hold Employers’ Liability insurance if you take on staff. This must cover you for at least £5 million.

You could be fined £2,500 for each day you don’t have the correct insurance as an employer.

It’s important (and a legal requirement) to make sure you have it in place, as this will pay compensation if an employee is hurt in the workplace or becomes ill due to their work.

Complete managed payroll service

From just £12.00 per payslip

Learn more

You will have to register as an employer for PAYE within four weeks of paying your first employee but not more than two months before you start paying people. Your duties as an employer will include being responsible for paying your staff an agreed salary as well as deducting any income tax and National Insurance contributions via PAYE.

Completing a new starter checklist for each new member of staff will ensure that you set your employee up on your payroll system correctly, and that they’re taxed at the right rate.

Learn more about setting up and running payroll in your business.

Does my employee need a workplace pension?

Employers are also required to provide a workplace pension scheme, and automatically enrol any employees who are eligible. You can outsource this task to your accountant or payroll provider! The Pensions Regulator website can also help.

You will need to send a written statement of employment to anyone who will be working with you for longer than a month. Employees should also receive a written contract which details their role, responsibilities, rights, and working conditions. This can be made up of more than one document and must include at least the following:

  • The business name
  • The employee’s name, their job title and a description of work
  • Employee start date
  • Rate and schedule of pay
  • Working hours
  • Holiday entitlement
  • The job location
  • Any contractual benefits or bonuses

Learn more about our online accounting services for businesses. Call 020 3355 4047 to chat to the team, and get an instant online quote.

About The Author

Suzanne Goodier-Dodson

I'm a Senior Payroll Clerk with a degree in Mathematics, responsible for overseeing every aspect of payroll for our clients. In my spare time, I love to travel and going to gigs. Read my Staff Spotlight.

More posts by this author
Notify of
Inline Feedbacks
View all comments

Read more posts...

Maternity Pay for Self-Employed People

Being self-employed can offer the kind of freedom and flexibility many of us dream about. But if you’re looking to start or…

Read More

What are Payments on Account?

Payments on account are a type of advance payment that you might need to make towards your Self Assessment tax bill. In…

Read More

Tax and VAT for Online Dropshippers

Selling online through your own website or on an ecommerce platform can be a great way to launch a business, or just…

Read More
Back to Blog...

Confirm Transactions

The number of monthly transactions you have entered based on your turnover seem high. A transaction is one bookkeeping entry such as a sale, purchase, payment or receipt. Are you sure this is correct?

Yes, submit my quote
No, let me change it

Please contact our sales team if you’re unsure

VAT Returns

It is unlikely you will need this service, unless you are voluntarily registered for VAT.

Are you sure this is correct?

Yes, the business is VAT registered
No, let me change it

Call us on 020 3355 4047 if you’re not sure.


You will receive our bookkeeping software Pandle for free, as part of your package.

You can use this to complete your own bookkeeping, or we can provide a quote to complete your bookkeeping for you.

Please select and option below:

I will do my own bookkeeping
I want you to do my bookkeeping

Call us on 020 3355 4047 if you’re not sure.