Employing for the first time can be one of the scariest steps a business owner makes.

Here, we have a step by step process to becoming an employer and getting off on the right foot.

Where do I start?

STEP 1. Register with HMRC as an employer.

Apply online at: https://www.gov.uk/register-employer.

Following registration, you will receive 2 important numbers unique to you:

Employer PAYE reference (or ERN)

Usually in the format: 123 / AB12345

This links to your tax records when you start submitting payroll information.

Accounts Office Reference Number (AORN)

A 13 character reference in the format: 123PA12345678

This is the number you’ll use when you make a payment for the PAYE tax, NI and any other deductions from employees.

You’ll need to keep these details very safe for all future records.

Employers’ liability insurance

You need to get this as soon as you become an employer and protection for at least £5 million.

You could be fined £2,500 without it.

Make sure you display your certificate or keep it safe if you can’t. You can be fined up to £1000 if you can't prove you have this if inspected.

Set up a workplace pension scheme

You must enrol and make an employer’s contribution for all staff who are aged between 22 and the State Pension age and earn at least £10,000 a year.

The minimum contributions are: Employers 3% and Employees 5%.

You can choose to pay a higher amount as an employer if you would like to. This means the employee could pay less. As long as the total minimum is 8%. 

Get an employee contract set up

ACAS is like a best friend for empoyers with tons of advice on all things employment - https://www.acas.org.uk/ has lots of free to use simple employment templates for employee contracts.

Do check though if you have a complicated business and seek legal advice for those contracts.

We can also advise you on these and what they may need to include.

I.D. and DBS checks

Always obtain proof of ID to keep on file for new employees. This is to verify that they are allowed to work in the UK.

Check also if they need a DBS for the work they are doing. For example: working with vulnerable people, or in security.

A basic DBS costs £18 and takes up to 14 days to process.

Decide how much to pay

You must pay at least the minimum wage for employees.

For 2024/25 this is:

21 and over £11.44

18 to 20 £8.60

Under 18 £6.40

Apprentice £6.40

If you’re unsure of what to pay skilled workers, it’s a good idea to do some market research on pay in your area.

Payscale.com has a really useful tool you can use to check what you should be paying for the type of employee, skills and length of experience you are looking for. A good, fair salary is more likely to guarantee your employee will stay and grow with you.

Outsource payroll or employ a professional

Employing staff and paying salaries comes with many laws, schemes and rules that you must know and implement.

You can outsource your payroll to us, another accountant or employ a payroll professional to ensure you are doing it right.

Check out our payroll services and contact us for more information. We process payroll for any UK business and can ensure your employees always get their correct pay and all documents via an online portal or sent direct. Taking the stress off you!

What can we do for you?