As your business grows, you’ll need more capacity to provide a service or produce a product, and often a wider set of skills to manage the increase. The easiest way to achieve this is to hire a second pair of hands (or more if needed!).
A common question among sole traders, is whether they are allowed to hire staff.
The simple answer is ‘yes’. The desire to grow a business and to effectively manage a business can only happen when you start to consider what’s going on around you and hiring new staff members to help with the growth.
A better question to ask could be ‘when is the best time to hire new staff?’.
Every business owner is different, and every business has its own things going on, so this question cannot be a blanket answer for all but to understand when it could be time to hire staff is a good place to start. But there are certain aspects that cause red flag moments, when it can be a sign that it’s time to hire a new member of staff.
Can you relate to these questions:
- Are you finding your stress levels rising?
- Are you struggling to meet client deadlines?
- Is the quality of your work not as good as it should be?
- Is your work-life balance suffering?
- Are you lacking in enthusiasm for the business?
If you can answer yes to even a few of these questions, then it may be time to think about hiring a new employee.
When this time does arise, there are certain factors that you need to comply with and to keep in mind.
You can hire an employee as soon as you need to as a sole trader, just as you would in a limited company, but you need to inform HMRC that you are doing so. This needs to be done 4 weeks before you employ and pay the new member of staff.
When you set up a new employee, you’ll need to pay them via PAYE. All employees need to pay tax and national insurance contributions which will be part of the setup of the PAYE.
If you hire someone who is over the age of 22, and will be earning over £10,000, they will need to auto-enrol into a pension scheme. This is the same for any employer or limited company.
A contract of employment commences as soon as a job offer is accepted. Initially, it doesn’t have to be in writing, it can just be an agreement. Although an employee is entitled to a written statement of their terms and conditions of their contract within two months of starting work.
There are many benefits to hiring a new member of staff, most of which will alleviate the pressures outlined above.
You will be able to spread your workload, add more services or products and take advantage of new skill sets from other people. You’ll have extra time to work on your business and focus on what you love to do, building business relationships and networking in order to grow the awareness of your business name. Businesses grow out of trust and relationships. The more time you have to nurture those contacts and relationships, the better chance of growing a successful and profitable business.
If you’re struggling to keep on top of your finances or are at the point of hiring a new employee and need help with the payroll side of things, get in touch, we’d love to help!