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Hiring Employees as a Sole Trader: What You Need to Know

Payroll, Sole Trader

Hiring Employees as a Sole Trader: What You Need to Know

As a sole trader, you might wonder if you can hire employees to help your business grow. The good news is that you can! In this article, we’ll answer common questions about employing people as a sole trader and guide you through the steps.

Do I Need a Limited Company to Employ People?

No, you don’t need to form a limited company. As a sole trader, you can employ people without changing your business structure. Being a sole trader means you trade under your name, and having employees is an extension of that.

Can a Sole Trader Hire Self-Employed Workers?

Yes, you can hire self-employed workers on an occasional basis. They can invoice you for their services, which can be considered a business expense.

Steps for Hiring Employees:

  1. Determine Wages:
  • Ensure you pay at least the National Minimum Wage, based on the employee’s age.
  1. Affordability Check:
  • Factor in wages, National Insurance, and pension contributions into your budget.
  1. Advertise the Role:
  • Use local recruiters or job sites to find candidates. Make sure your listing is informative and fair.
  1. Verify Right to Work:
  • Check that potential employees have the legal right to work in the UK.
  1. Obtain Employers’ Liability Insurance:
  • This insurance is mandatory and covers workplace-related injuries or illness.
  1. Prepare a Written Job Offer:
  • Create a written job offer with terms and conditions, especially for employees working over a month.
  1. Register as an Employer:
  • Register with HMRC before the first payday. You’ll receive an Employer Reference number (PAYE reference).
  1. Set Up Payroll and Pension Scheme:
  • Ensure correct and timely payments to employees.
  • If eligible, set up a workplace pension scheme as per auto-enrolment rules.

Starting Payroll and Pension Setup Sooner Is Better:

Consider setting up payroll and pension arrangements promptly. This avoids any oversight and ensures your new employee is taken care of.

Remember, you can expand your business as a sole trader by hiring employees. Just follow these steps and make sure you’re meeting all the legal requirements along the way. Your business will be on its way to growth!

Everyone’s situation is unique. If you’re unsure, please don’t hesitate to contact our helpful team on 02392388003 or [book a discovery call].

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