{"id":1548,"date":"2023-11-07T10:00:00","date_gmt":"2023-11-07T10:00:00","guid":{"rendered":"https:\/\/ctt-group.co.uk\/accountancy\/?p=1548"},"modified":"2023-10-26T15:17:35","modified_gmt":"2023-10-26T14:17:35","slug":"taking-on-employees-what-to-ask-your-accountant","status":"publish","type":"post","link":"https:\/\/ctt-group.co.uk\/accountancy\/taking-on-employees-what-to-ask-your-accountant\/","title":{"rendered":"Taking on employees \u2013 what to ask your accountant"},"content":{"rendered":"
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Taking on an employee for the first time is an exciting prospect. Finding that you need an extra pair of hands is a good sign your business is growing and thriving!<\/p>\n

It\u2019s also a sign that you\u2019re making smart business decisions. Delegating responsibility for the everyday tasks that don\u2019t require your immediate attention leaves you more time to focus on your overall strategy \u2013 the ultimate goal of any successful business owner.<\/p>\n

How your accountant can help with taking on employees<\/strong><\/h3>\n

Alongside the HR considerations that come with taking on an employee, a degree of accountancy housekeeping must also be adhered to.<\/p>\n

Understanding the financial implications and responsibilities of hiring an employee will ensure you\u2019re both HMRC compliant and that your employee is paid on time. It will also help you balance your business\u2019 outgoings and monitor the ROI of having a new staff member on the books.<\/p>\n

At CTT Accountancy<\/a>, we offer growing businesses advice and support in preparing to take on their first employees, including setting up payment systems and ensuring they\u2019re HMRC compliant.<\/p>\n

Here are some of the accounting considerations we can help you navigate as a new employer:<\/p>\n

Employee<\/strong> pay<\/strong><\/h4>\n

By law, you must be prepared to pay any employee at least the National Minimum Wage<\/a> in accordance with their age if they are 16-22, or the National Living Wage if they are aged 23 or over and not in their first year as an apprentice.<\/p>\n

The government sets these figures and outlines the minimum hourly rate a person must be paid for their time. The National Minimum Wage and National Living Wage are based on median hourly wage estimates put forward annually by the Low Pay Commission.<\/a> These figures are reviewed and subject to change each April, so it\u2019s important to know what the current rates of pay are and if they\u2019re likely to increase any time soon.<\/p>\n

Although we are unable to advise you on the amount to pay your employees, at CTT Accountancy, we offer insight into the costs associated with hiring staff and help forecast the financial viability of taking on one or more employees based on the salary you expect to pay them, and any other expenses incurred by their employment.<\/p>\n

Managing employment costs<\/strong><\/h4>\n

Taking on a new employee costs a business more than just an additional salary. The recruitment and training expenses associated with finding and hiring top talent are important financial considerations, too. It can cost up to 20-30% of an employee\u2019s final salary if you hire through an agency and around \u00a3200-400 if you use a job site.<\/p>\n

There\u2019s also the impact on a business\u2019 overall efficiency and productivity, along with onboarding and integrating new staff members, and the expense of purchasing any additional plant your new employee might need.<\/p>\n

You may also want to consider setting aside additional funds for things like bonuses and employee benefits such as gym membership or staff discounts.<\/p>\n

At CTT Accountancy, we can help you put together a comprehensive financial plan for taking on, training, and retaining your employees, giving you a clear breakdown of the costs and the projected ROI you should expect from investing in additional staff.<\/p>\n

Employer insurance<\/strong><\/h4>\n

One cost associated with becoming an employer which you may not have considered is Employer\u2019s Liability Insurance<\/a> (ELI). You must take out ELI with an authorised insurer as soon as you become an employer and it must cover you for a minimum of \u00a35m.<\/p>\n

Failure to take out ELI can result in fines of up to \u00a32,500 for every day you are inadequately insured. You can also be fined up to \u00a31,000 if you do not display your EL certificate or do not produce it upon request during an inspection.<\/p>\n

The cost of ELI will depend on the degree of personal risk associated with the employee\u2019s role and can be anything from around \u00a35-500 a month. At CTT Accountancy, we\u2019ll put you in touch with our in-house team of professional financial advisers who will help find the right level of ELI for you and your business.<\/p>\n

Registering as an employer with HMRC<\/strong><\/h4>\n

In addition to securing ELI, you will also have to register as an employer with HMRC. You can do this up to 4 weeks before you start paying your new staff member. Bear in mind it can take up to 15 working days to receive your employer PAYE reference number.<\/p>\n

At CTT Accountancy, we can register you as an employer when we set up your PAYE with HMRC. If you are the only director of a limited company and are claiming a salary from the business, you will already be registered with HMRC as an employer.<\/p>\n

Setting up and managing PAYE<\/strong><\/h4>\n

PAYE or \u2018Pay As You Earn\u2019 is HMRC\u2019s means of collecting Income Tax and National Insurance (NI) from employees. Although it\u2019s a compliant, organised way to pay your employees and ensure their taxes are up to date, it can also be complicated and time-consuming. Duties and responsibilities include:<\/p>\n