The decision to employ staff can be daunting; it’ll impact your profits, your management style and you’ll be responsible for another set of people you didn’t need to consider before. But employing staff is necessary when it comes to growing your business, seeing it flourish and allowing yourself more freedom to step away from work sometimes too.
Here we take a look at when the time might be right to employ that first new recruit and what you need to know about your obligations before you decide.
What time is the right time? Employing staff
When to start employing staff really comes down to the age-old business model of supply and demand. While some entrepreneurs may consider employing staff at an early stage of their business – once they’ve identified a need but before they’ve pulled in the business to necessitate fulfilling that need – this may cause cash flow problems. However, leave it too late down the line and your company may lose business due to productivity issues.
Four key indicators that the time is right include:
Business is steady but you have no time to develop or generate new leads. You may need to take on someone to do day-to-day tasks, to free up your time. Or you may consider taking on someone in a business development role.
Business is coming in so fast that you can’t keep up with demand. This could mean taking someone on to help with the workload. Otherwise, you could start putting a structure in place for a production line and take on more than one specialist to fulfil the need.
Business is going well and you’re struggling to deal with one aspect of management. You may be great at creating your product, but not so keen on dealing with finance. Taking on a professional in this area may help, although you may also wish to consider outsourcing here.
Business is booming but you’re never able to step away. Once your business is thriving it may be worth considering employing staff, enabling you to take some time out.
Before employing staff – key considerations
Before you start employing staff it’s important to recognise the implications for your business, as well as the benefits.
As well as considering the salary your employee will actually receive employing staff has many other financial implications. You’ll need to budget for additional PAYE contribution. Plus, you’ll need a system to manage payment, as well as any auto-enrolment pension contributions they may be eligible for.
Considered overheads. You probably worked from home when your business needed just one person to operate. With employees, you may need new premises, plus the tools and training your new employee needs to fulfil their role.
Managing for success
Getting the best out of your employee is also an issue and you’ll need to consider your own strengths in dealing with people to ensure you have the right skills to do this. Getting the paperwork in place from the start of your employee’s contract is useful here too – from ensuring an understanding of their role profile and responsibilities, through to any company policies and procedures you may wish to put into place.
Your legal and regulatory obligations
As an employer there are a number of legal and regulatory obligations that you must fulfil. These include:
Register with HMRC as an employer – this must be done before your new employee’s first pay day and can take up to two weeks.
PAYE and your payroll – employers normally have to operate PAYE as a part of their payroll processing and this must be reported to HMRC on or before each pay day.
Employers’ liability insurance – ensuring your business can cover any injury or disease to your employees as a result of their employment is a legal requirement and you need to display your insurance certificate where your employees can easily see it.
Health and safety – you have a duty by law to provide your employees with a safe working environment, enforced by the Health and Safety Executive (HSE).
Working hours – the Working Time Regulations (1998) sets a maximum weekly working time limit as well as night working limits and health assessments for night working.
Holidays – your employees will also be entitled to statutory or annual leave.
Statutory leave – from sick leave through to maternity allowance and leave and paternity pay and leave.
Flexible working – from 30 June 2014 all employees have the right to request flexible working, which must be dealt with in a ‘reasonable manner’.
Hiring your first employee is a big step that needs careful consideration, and new business processes. It’s also the first step in growing your business and can be a great leap for your future success.