Is it time to take on help (or more help) in your business?
What's the best way to do it?
And how much will it really cost?
Whether you're just starting out in business and need to cover areas of expertise you don't already have, or if you've been in business a while and things are just starting to take off, the best way to take on help is something many small business owners want to know.
In addition to an employee's salary, you also need to pay for...
While employing someone seems like the obvious solution, it's worth bearing in mind that it's not just your new hire's hourly rate or salary that you'll need to pay. There's a whole host of other costs involved, too. In fact, once you've weighed them all up, you might not want to employ someone immediately at all.
National Insurance contributions
(Unless you're eligible for Employment Allowance)
How do National Insurance contributions and PAYE/income tax work?
National Insurance contributions are mandatory by law. NI is essentially a tax paid by workers, their employers and the self-employed. It's used to fund state benefits. It's different from, and is paid in addition to, Income Tax.
Employers are responsible for deducting Income Tax and National Insurance contributions from employees' wages and paying them to HMRC each month.
One of the easiest (and often most cost-effective) ways to manage this is to pay for expert payroll services from an external provider.
Employment Allowance can entitle you to a reduction in National Insurance contributions if you meet certain criteria set by the government. Find out if you're eligible for Employment Allowance here.
PAYE is HMRC's system to collect Income Tax and National Insurance contributions from employees ahead of them being paid their wage by their employers. It's a mandatory requirement for employers, and they must operate it as part of their payroll arrangements.
There are some exceptions to having in place a PAYE arrangement. For example, employers don't need to register for PAYE if all their employees are paid less than £113 a week and none receive expenses or benefits. (Pay here includes tips, bonuses, sick and maternity pay.) However, even when an exception applies, the employer must keep payroll records. You can find out more here.
Want to access this guide?
Already have a Farillio account? SIGN IN
Get unlimited access to 100s of legal resources by signing up to Farillio today.
- Manage your legal documents online
- Well written legal templates by our partners
- Guides to help you understand law
- Legal help available every step of the way