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Running a business

Hiring your first employee

Hiring your first employee is a big financial (and emotional) commitment, but it’s also exciting that your business has grown big enough to create a job opportunity. What started as your dream has now become a growing business. It’s no longer just you. Work in your business can potentially now go on even if you’re not there. You’re also in a position to help somebody else by creating a job for them. That’s quite an achievement.

How to employ someone for the first time

To ensure that your first hiring experience is as smooth as possible, you need to have an idea of the basics. Here are some of the things to think about when you’re hiring your first employee:

What kind of employee do you need?

Do you need ‘more of you’ or do you need to introduce new expertise into the business? What expertise do you need?

Will the role require qualifications or experience?

Probably a mixture of both but how essential are they and in what proportion? If you found the perfect person could you train them on any technical aspects? Or perhaps someone else could train them. Don’t forget the importance of hiring someone who’s really committed to the role and your business.

Is it a full-time or part-time role?

You don’t need to wait until you have a full role to recruit. When you need two different skill sets it may be easier to recruit two different people, if the costs make sense.

Is the role based in a specific location?

If you’re running a physical shop then people may need to be based on site - but office work can increasingly be done remotely. Working from home is now widespread. In fact, offering flexible hours and location can make a role accessible to more people and could make the position more attractive.

Work out the cost of employing someone

Decide on the salary and benefits you will need to pay for the right person. How much can you afford? Will this attract the calibre of person that you want to employ or do you need to adjust either the salary or your expectations? You can check out similar roles on job boards, such as LinkedIn or Indeed, to help you get an idea of salary expectations.

Don’t forget that on top of the salary, you’ll need to pay Employer’s National Insurance of up to 13.8% and pension contributions of at least 3%. You may also need to purchase additional furniture, equipment, company car or software licences.

Although there’s a cost to hiring an employee, they should also help your business generate more income. Or, if it’s a support role, they could free you up to generate more income. They may also bring expertise that you were previously paying for externally at a higher rate.

Initially you may need to pay out to recruit and train your new person, and they could take a few months to learn the new role. A more experienced person will require less training but may be more expensive, and they will still need to adapt to how things run in your business.

What does the hiring process look like?

Write a job description

First you need to write a job description for the new role. Here are some things to include:

  • Job title

  • Summary of role

  • Responsibilities and duties

  • Deliverables

  • Stakeholders and how they fit in the organisation

  • The support and training will they receive

  • Information about the recruitment process and timescales

  • Start date

  • Salary and benefits. Including a salary encourages more people to apply.

Advertise the new role

You could choose to use a recruitment agency to handle this for you or you may prefer to do it yourself. An agency might be more costly but they will save you time in generating and sorting the initial enquiries. They may already have a database of suitable candidates.

Consider advertising the vacancy on online job boards, LinkedIn and other social media, local papers or local colleges. Don’t forget to ask your personal connections.

If you’re paying for an ad by the number of words or size of advert, then you can keep it brief and have a link through to the full details on your website. You can choose whether to request applications via CV or a standard form. You can also include the vacancy on your website.

Select and interview candidates for the role

Select the applicants most suitable for the role and invite them to an interview with their new line manager and anybody else involved in the decision-making process. This may be a formal or informal process.

You could run a series of interviews. An initial pre-screening interview by telephone or video conferencing is a good way to narrow down the candidates before more in-depth interviews.

Remember that you don’t have to stick to the traditional interview format of a face-to-face interview. Especially now, interviews can be held remotely through Zoom, Google Hangouts or any type of video conferencing. Just make sure that everyone is aware of the technology they need, and that they have it.

Their CV should establish on paper that they are qualified for the role. The interviews will help test in depth whether their knowledge, analytical skills and attitude are what your business really needs. Don’t just evaluate on paper qualifications.

Give the candidates a good opportunity to ask you questions about the role and company culture. The kind of questions they ask may tell you a lot about them.

Depending on the role, you may use competence tests and personality profiles to help choose a good mix for your new team. If you use a recruitment agency they can handle this for you, or you might enlist an HR expert to help you.

A company culture will benefit from people with a range of different backgrounds, personalities and experience, who can each contribute to building a team stronger than the sum of the individual parts.

An interview helps check whether an employee may be a good fit. But make sure that you prevent any kind of discrimination.

Making an offer and collecting references

Once you’ve found the right person, you may want to make a verbal offer conditional on satisfactory references. Follow up by verifying essential qualifications and requesting references. If you’re recruiting a bookkeeper, you might want to see a copy of their professional certificates. You can ask specific questions about experience when requesting a reference but do be aware of the previous employer’s time.

Once you’ve completed all these checks, you could make an unconditional offer and arrange a start date. Don’t forget to drop a line to the unsuccessful applicants who have taken the time and trouble to apply.

What do I need to do before my new employee starts?

Register as an employer with HMRC and set up PAYE

You must register as an employer before the first payday but do allow plenty of time (perhaps a month) for HMRC to set up your payroll scheme and also for you to set up your access to HMRC once you have received the relevant registrations. You can’t register more than two months beforehand (or you will have to submit nil payrolls).

Take care of paperwork

Agree a contract with the terms and conditions of employment and request proof of ID and entitlement to work in the UK.

Choose your payroll software

You may choose to use the free HMRC online tools. However, paid software is likely to be much easier to use and will also generate the payslips, P45s and P60s for your employees.

Make sure you have all the equipment

Organise desks, computers or any other equipment that your new person will require to hit the ground running on their first day. Set up computer logins for all relevant software and email accounts.

Think about insurance and pensions

Check if they need a workplace pension and get employers’ liability insurance if your current business insurance doesn’t already cover this.

Initial induction and procedures

Prepare an induction checklist to ensure that your new employee will receive all the training and procedures they need for the job. Include how to request time off and notify you of sickness. You should also carry out a health and safety assessment for the new role.

Get ready to welcome your first employee

Everything should be ready to welcome your new employee. If it’s a physical location, either get in early or arrange for them to start a little later on their first day so that they’re not hanging around. If it’s virtual, set up to meet them right at the start of the day.

If not already done beforehand collect payroll information, P45 and their emergency contact details.

If it’s a physical location, give them a tour of the premises and don’t forget the small things like loos, where to get a cup of coffee, lunch arrangements and how to order stationery. If you’re working remotely then agree how you will normally communicate information.

If the work environment is virtual, it’s particularly important to set up meetings between the new employee and the people they will be working with. Explain who does what and how.

Introduce your employee to any key customers and suppliers they will be working with.

A good preparation will ensure that your new starter feels welcome and is up to speed as soon as possible. And remember - be ready to answer any questions.

This article is intended as general information only and does not constitute advice in any way. For any specific questions, you may want to consult your legal advisor or a qualified accountant.

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