Self Employed and taking on staff...

[Gordon N]

I am currently classed as a sole proprietor, however within the next few weeks I am looking to take on my first employee...

Firstly, my understanding is that I will be required to register with PAYE - am I correct in that assumption?

Secondly, would I be worth registering as a limited company at this point to better protect myself and my soon to be employee(s)?

Any opinions, experiences and guidance welcome.

 

[Employment Law Services]

Congratulations Gordon that's great news!!

The short anwser to your question is 'YES', you have a legal obligation to operate PAYE on the payments you make to your employees if their earnings reach the National Insurance Lower Earnings Limit.

For the tax year 2010-11 this is £97 a week, £421 a month or £5,044 a year.

But there are some additional things you should consider before employing someone:

Is the work they'll be doing constant?
How long will the work last?
How many hours each week will they work?

Answers to the above will help you determine what type of 'worker' is best.......casual/freelance, fixed-term, permanent full-time or part-time.

IN all cases you have legal obligation to provide, at the very least, a statement of particulars detailing a number of key things relating to their employment such as place of work, salary, etc.

In terms of setting up as a limited company, my advice would be yes. In addition to the protection it provides, there are a number of tax benefits to be had.

 

[Gordon N]

The hours will be irregular to begin with, as things grow more they will increase building towards full time by the end of the summer (all going to plan).

Is there a good reference point of how to determine how to class the type of work?

 

[Employment Law Services]

The hours will be irregular to begin with, as things grow more they will increase building towards full time by the end of the summer (all going to plan).

Is there a good reference point of how to determine how to class the type of work?

You probably want to start initially with a 'casual' contract then migrate to a perm contract once things pick up and hours offered can be assured.

Employment : Directgov

link might help but if you have any queries let me know.