Howdoes Employing A Person Affect Me Finacially

[brooms2013]

I have a very small cleaning business but I need to employ 1 person to help, what do I need to know and how do I finance it?

[AlwaysConfused]

When you say very small, at the moment, is it just you? If so, I wouldn't employ anyone, but take on someone self-employed to fill the shortfall. A lot less paperwork and financial outlay for you

[factor-fiction]

I'm not sure what you mean by 'finance it'- presumably you will receive income from your clients and will pay someone from that.

This may help
https://www.gov.uk/employing-staff

[TonyV]

If you need to take someone on because of to much work for you to cope wth that should finance it. If you employ someone full time as PAYE then you need to deduct tax and national insurance and forward to HMRC. Should be some advice at HMRC or ask your / an accountant

[boxtops]

You'd need to check out the insurance aspects if you employed someone too - as well as your current Public Liability Insurance, you'd need Employer's Liability cover too. You might find that as an employer you have to provide training, H&S, COSHH etc.

[brooms2013]

Thank you for all your advice :) my business is just me at the moment but yes its growing and I know I will need to employ someone in the very near future, I'm just very unsure of how I finance sick pay holiday pay and if my taxes change due to taking a person on. It's so much to think about but I want to be 100% sure of what I'm doing before I engage in such a task :/ it's nice to ask normal people instead of reading a lot of jargon that gets me frustrated

[thegreens]

avoid actually employing someone wherever you can. It is fraught with costs/difficulties as other replies have told you. Use a self employed person wherever you can and if you have to employ someone, make sure it is for as few hours as possible (to prevent you having to pay national insurance), better to take on a couple of part timers than a full timer

[brooms2013]

I'm starting to think the same way, maybe employing a self employed person will be the best option as they can take care of their own costs rather than me overseeing everything! Thanks for taking time to offer me your advice it's much appreciated :))

[buildersmate]

I think you are making the right decision for now.
As others have pointed out, taking on an employer requires you in a whole raft of administrative tasks which will consume your time. In particular is the process by which you have to deal with supplying information and making regular payments to HMRC (for tax and NI for your employee).
Taking on an employee is a big step and in the first instance it is a low risk solution to use someone on a self-employed basis. Ideally that person should have another job working for someone else either as an employee or a self-employed role.
The simple answer to how taking on an employee affects your own tax position (for info for later), is that you pay income tax yourself to HMRC, and the amount you pay is based on your net profit. That net profit is the difference between your businesses income from all customers, less all your allowable expenses and costs. One of those costs is the whole of your employee costs, including pay, NI, sick pay and holiday pay.

[TonyV]

Also with using self employed people and they don't work out, or meet your standards you can simply not use them again. Would also be beware of giving to much information to a subby so they cannot set up in competion

[brooms2013]

I'm so glad i joined this site! The amount of time I spent reading about employing a person but still not really getting the information I need then just popped my question here and you've all given me the advice that i was looking for! Your all worth your weight in gold :))

[TonyV]

Thanks for your thanks. We will all be asking you how to get stains out lol