In the UK, 3.6 million businesses fall into the category of ‘enterprises with no employees’.

The vast majority of self-employed people start out working alone, and have no specific plans to take on employees. However, every year, thousands of one-person firms (sole traders) grow to the point where they have to take on employees in order to continue to trade and take advantage of the demand for their services.

This is a great position to be in, but also a daunting one. Most sole traders have no experience of recruitment, managing people and dealing with employee tax and payroll. Here we look at how to deal with the situation and make taking on your first employee as simple as possible.

Seek advice

The first step is to seek advice about recruitment and taking care of employees. Many of the people on this site employ their own staff, so they can point you in the right direction.

Freelancer or employee

You need to determine whether you should employ a freelancer or employee. Employing a freelancer is usually far easier and gives you more flexibility. However, they are not under contract, so can potentially leave you in the lurch. In addition, you need to realise that once you employ someone regularly doing the same tasks each week they eventually become classed as an employee in the eyes of the law, so many of the advantages of employing someone as a freelancer can easily be lost. You need to understand the rules and regulations surrounding employing staff to be able to make an informed decision about how to get the staff you need.


Choose your employee – by Shutterstock

Rules and regulations

It is important to sit down for a couple of hours and understand all of your responsibilities as an employer. Pay particular attention to the regulations governing contracts and the rules surrounding redundancy and sacking people.

When you employ someone, you are entering into a formal contract, so it is important to understand the consequences of that contract.

Understand the costs of employing someone

Familiarise yourself with the minimum wage regulations and check how much the industry is paying for the kind of work you are offering. Doing this and understanding the regulations surrounding employee tax, NI and holiday, sickness and maternity pay is essential to allow you to determine the real cost of employing someone.

Also, factor in changes you will have to make to turn your premises into a safe working environment that complies with health and safety rules. You may also need to update insurance policies to include employee liabilities and other factors. Check with your business insurance firm(s) to see if employing people changes the costs of those policies.

Practical steps

Once you have familiarised yourself with all of the above you will be in a position to recruit someone. This is not too difficult, all you need to do is to advertise the position and do the interview.

In the meantime, prepare things for your new employee. Buy the necessary equipment and find a HR firm to take care of drawing up the contract and setting up your payroll or providing you with the right payroll software. You will also need to work out what training your new employee needs and provide that.

Bear in mind that it will take time for your new employee to get up to speed and start working at full capacity. You need to be realistic and factor this fact into your work schedule.

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