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Are you a sole trader who is looking to expand? Hiring people to help you run the business is the next logical step to ensure its future growth. Many people wonder how this affects your sole trader status. So, can you employ people as a sole trader, or do you have to form a company?
The good news is that you can employ people and remain a sole trader. There’s no need to set up a limited company if you don’t want to. While sole traders operate the business on their own, that doesn’t mean they have to work alone. The term sole trader just means that you are trading as yourself, under your own name (our guide explains operating as a sole trader in more detail!).
You can choose to employ people on a permanent, part-time or freelance basis, whatever suits you best. So, now you know you can hire people and maintain your sole trader status, it’s time to ensure everything is set up correctly.
For those who have only ever done accounting for themselves, it’s a bit of a jolt to suddenly start considering someone else in your tax affairs. It can be quite a learning curve, but we’re here to help.
From now on, you’ve got to start thinking about running payroll, employer’s National Insurance, and employee benefits like holiday, maternity and sick pay.
One of the first things to do is register as an employer with HMRC, and getting set up on PAYE. This is so that you can deduct income tax and National Insurance from the wages of eligible employees, and pay it on to HMRC on their behalf. Download our guide to learn more about setting up PAYE.
It’s best to do this as soon as you can so nothing is forgotten or neglected while you prepare to train a new employee!
Learn more about our low-cost online accounting services for sole traders. You’ll have your own dedicated accountant who will work closely with you. Get an instant online quote or request a call back from the team.
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