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Becoming an employer (1)

As of today, I am an employer!

I’m still a sole trader (yes, you CAN employ people as a sole trader, you don't have to be a limited company) but HR by Tara has reached a stage when I will now benefit from someone assisting me.

HR by Tara’s mission is to help small businesses to be great employers, so I thought that documenting what’s involved in setting up as an employer in the first place would be a useful source of information for future clients. So here goes...

Deciding to employ

I provide HR services to small businesses. Some of the work I do requires my particular expertise and a deep understanding of my clients. Some of it is all about the relationship between me and the business owners I support. Other tasks could be done by someone else, once I’ve set up the right processes and templates. To increase my capacity, to support more clients, I need extra resource.

I could have outsourced some work to a freelancer, but I decided to employ. I want the person I work alongside to feel part of my business, even if she’s working on a rather ad hoc basis to start with. And after all, employing people is what I know best!

There are differences in the relationship, legally, for tax purposes and in day-to-day working, between engaging a self-employed freelancer and employing someone. It’s important to choose wisely. Feel free to get in touch if you want help with making that decision for yourself or your business. As well as helping get businesses ready for employees, I've also recently helped a few clients with putting the right arrangements in place for their freelancers.

Finding someone to employ

In my case, I had an opportunity to bring a particular person into my business and luckily she agreed to join me. However, if you don’t already have someone in mind when you decide to take an employee on then it’s really important to choose your new worker well.

Be clear what you want the person to do, what they will be accountable for delivering for your business. Be clear about what skills and experience you think are essential for them to be able to do that well. And be clear about what attitudes and ways of working will best fit with your values and how you work yourself.

Choose your first employees wisely and they will bring you more benefit than they cost. I’ll share more about the art of building the right team, and managing risks along the way, in a future article.

Setting up as an employer

There are lots of things you need to do to get your business ready. Here’s my checklist for what I’ve done so far to put everything in place to employ someone. I'll write a bit about each step in some articles over the next few days.

  1. Adding Employer’s Liability Insurance to my business insurance (did you know it’s a potential fine of £2,500 per day if you employ someone and don’t have ER's liability insurance in place?)

  2. Creating a Principal Statement of Employment Particulars that complies with the requirements of the Employment Rights Act (you must give one to each employee on or before their first day)

  3. Developing an employee data protection policy and privacy notice (plus registering with the ICO and thinking about how I keep employee records)

  4. Developing a health, safety and wellbeing policy (you only need a written one if you have 5 or more people, but I thought I’d start as I mean to go on)

  5. Registering with HMRC as an employer and set up PAYE (beware, you need to already have a Government Gateway account for your business and then have relevant ID to hand in order to register - this was the trickiest bit for me!)

  6. Deciding how to run payroll (I’m going to use Basic PAYE Tools from HMRC, as I only have one person to pay and I have a good basic understanding of running a payroll from many years of liaising with payroll people)

  7. Set up a workplace pension (I’m going with NEST, as it’s simple to set up and operate - not what I’d choose for a larger business, but an easy option when I’m just setting up)

  8. Set up the right systems and security measures to enable the person to work effectively while you also protect your business (for me that's meant creating accounts on various systems (with correct access rights), providing training on Information Security and Data Protection, and having a good Information Security Policy)

So, after all this I am now in a position to have someone start working within my business, which is where the hard (but more enjoyable) work starts - induction, training, expectation setting, delegation, feedback and all the rest of what good people management looks like...

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