Small business and employment

Whether your business starts out with just you huddled around your kitchen table or out on the road building a client base, continued growth could mean that you need to take on an employee. 

Adding employees to your business is not just about being able to take on more work, it is also a valuable opportunity to bring new skills, fresh eyes and inject some more energy into your operations. 

But hiring someone is not a simple equation that will automatically lead to more business and more profits. Hiring the wrong people can create internal dynamics that can destabilise the company, give clients a bad impression and prove to be a wasted investment. 

So what factors need to be factored in before you begin looking?

The law

There are a number of employment regulations, whether they detail the various rights of the parties involved, make sure that no one is mistreated or ensure that everyone starts at the same level. 

The main things you will need to remember are:

  • to register as an employee 
  • to collect your new employees’ P45 
  • national insurance and PAYE 
  • reporting to HMRC.

The true cost 

As well as the money you pay them every month, a new employee represents a significant cost undertaking in a number of other areas. Those who wander down the recruitment path without careful consideration of the potential costs can quickly find themselves lost in a maze of ever-multiplying expenses. 

As well as the employee’s salary and the tax that goes with it, you will need to consider the cost of the following: 

  • optional benefits such as a company car, pension, bonuses and healthcare and any tax obligations 
  • more specific employee costs such as training, software licenses and IT support 
  • consumables like stationery, tea and coffee and toilet paper 
  • administrative overheads such as HR and payroll 
  • sick holiday leave and paid holiday.  

This is by no means an exhaustive list and the costs will vary across different sectors and individual companies.

Attracting the right people 

The outlays associated with making sure that you actually find the right person is another important aspect to consider. 

You need to offer a competitive rate of pay in order to make sure the position is attractive to potential applicants. You do not want to offer anything wildly above or below the average salary for similar roles across your sector. It is often the benefits that can sway an applicant. 

How are you going to advertise the role? There are many free ways to advertise for jobs, such as through social media and online job sites, but there are also other ways to ensure that you find exactly the right person. You may have to pay to attend certain events to network or advertise in certain mediums. 

If you take the time to think about the true cost of taking on a new employee then you are unlikely to face any nasty surprises that may put both your company and the financial health of your new worker into choppy waters. 

If you are a small business owner who wants to take on employees to help you take the next step and need some advice or technical guidance, you can call us on 01375 383 888, fill in our contact form or email 

21 Lodge Lane
RM17 5RY

Tel: 01375 383888
Fax: 01375 391672