How to Employ Staff in Your New Limited Company
Employing staff in your new limited company is a big step for your business. Having one or more employees within the company could help increase productivity and output, boost efficiency and help the company develop in general. However, certain legal obligations must be carried out once you are taking this bold decision. Failure to meet up with them could lead to fines.
Apart from that, you need to follow the right steps so you can hire the best talents for your company. Here’s a step-by-step guide you should follow when employing staff in your new limited company.
How to Employ Staff in Your New Limited Company
When employing staff in your new limited company, here are some points you should take note of.
1. Register with HMRC as an Employer
Once you start employing new staff within the company, then you must register with the HMRC. This must be done within 4 weeks of employment and before they are paid their first salaries. Even if the employees are part-time workers or contractors, you would still need to do this registration. This can be completed online and could take up to four or five days before you will be issued your employer's PAYE number.
Once the registration has been done, you can easily run the payroll of staff and make other appropriate tax deductions.
2. Confirm if the candidate has the right to work in the UK
It is the responsibility of the employer to verify if a candidate has the right to work in the UK or not. So you can use the UK government online check tool to verify each document and visa conditions to see if they have the right to work in the UK.
If an employer fails to meet this requirement, he or she might be fined up to 20,000 pounds. So it’s essential to do a thorough check before employing anyone.
3. Check If the candidate doesn’t have a criminal record
While some job nature requires that a criminal record check is done on every potential employee, others do not. However, as an employer, it is important to do this check to avoid future problems. You should thus do a DBS (Disclosure and Barring Service) check before employing staff. You can opt-in for a basic or detailed check depending on the job role and whether or not the employee would be working with vulnerable people or children.
4. Do a pre-employment check
Apart from having to do a criminal record check on the employee, you should also consider verifying the identity, certifications and other documents submitted during the recruitment process. With this, you would be sure you are employing only those that are fitted for the job.
5. Get Employers Liability Insurance
Once you start employing new staff for your company, you are expected to obtain the employer's liability insurance which must provide your company with at least 5 million pounds covers. Obtaining this vital document will help protect your business from a lot of legal expenses whenever an employee sustains an injury or becomes ill as a result of working for your company. However, failure to meet this requirement could lead to some penalties and more so you might also be fined if you don’t display this certificate or you don’t make it available whenever it is needed for inspection.
6. Payroll Set up
Aside from registering with HMRC, you’ll need to set up payroll. This would ensure that tax deductions and National Insurance Contributions are applied to all employees’ wages. With the aid of some payroll software, you can run payroll yourself or outsource to an outside party.
As an employer in a limited company, you are responsible for the timely payment of staff, tax deductions and National Insurance Contributions, Informing HMRC about the new staff, keeping employee records and so on.
7. Provide Employment contract
Once your company finds the best talents for the new job role and they’ve agreed to take up the job, you must provide a written employment contract. In the employment contract, you should have the terms and conditions of employment set out, it should also contain the rights, duties and responsibilities of the employees. The agreed wage to be paid must also be stated and this shouldn’t be below the minimum wage for their age bracket. Other things to be included in the employment contract include the employment start date, hours of work, pension, holidays and sick pay, nature of the contract and so on.
The employment contract should therefore be signed by the employer and the employee and must be issued to the new employee as soon as possible. An employment contract might not be mandatory, but it is important that you provide it as a company.
8. Register with the pension scheme
You would most likely need to register for the pension scheme once you start having employees. Although employees could decide to opt out of a pension scheme, this must be done willingly by them. Certain requirements like the age of the employee, the total amount to be earned in a year and so on must be met by each employee to join the pension scheme.
9. Keep up-to-date records of employees
It is important to keep up-to-date records of every employee, both the ones issued during and after the appointment process. This should be kept for at least 6 years and can be kept within the office or as an electronic file.
Steps to Follow when Employing New Staff in Your New Limited Company
1. Decide on the skillsets you require
You should be able to know the type of skill set that is required by the candidates before putting out an advert for the new job role. Skillset would involve what you expect the employee to be able to do and know. Do you want someone who’s good with video editing, office management, and writing or someone who can manage Microsoft Office tools properly?
With that, you need to determine the skillsets that are needed for each job role. This would guide you in getting the best talents and more so enable potential candidates to understand what your company wants.
2. Know the type of employees you need.
You should also decide on the type of employees you would need. Are the employees going to be working on a full-time or part-time basis? You should also know what their employment status is going to be. Are they going to be a contractor, worker, employee etc.?
3. Advertise the new role
Adequate advertising of the new job position makes it easier for your company to attract talent. Advertising within your local community might not be enough, so you could use some other means to reach a greater audience. One important tool to utilize for advertising is social media. You can advertise the new job position on your company's LinkedIn page, Instagram, Twitter and so on. If you have a company’s website, you should utilize that. Platforms like Indeed could also be a great place to find new talents.
If your company would be using the service of a recruitment agency, then they would most likely do the advertising.
4. Set up the pay
Once you’ve been able to determine the skills that are required for each job role, you should go ahead and set up the pay for the roles. Importantly, the pay must not be below the minimum wage but could be above it. To make this step easier, you should find out what other companies pay workers for the job role. It doesn’t have to be the same as the other companies but should be within the same range. Overall the amount to be paid for each job role depends on the kind of skillsets you want, numbers and years of experience, level of expertise, what your company could afford to offer, job location and many more.
5. Interviewing and selecting candidates
Selecting the best candidate for the job could sometimes be tedious work especially if you have so many applicants. You would need to do so much scrutiny so you don’t miss out on the best talents. The first thing would be to examine the CV or resume submitted by each applicant to see if they have the required skills and level of expertise needed for the job role. Once you’ve gotten a good number of candidates from the selection process, then they will be invited for interviews.
Interviews are there to help examine the candidates better and to see if they can demonstrate what they have in their documents. So apart from the candidate going through written and oral interviews, you should also give them some tasks to complete to see if they have some skills.
6. Appointing the new staff
Once you’ve followed all the above steps, the next thing would be to appoint the most fitted candidate for the new role. As an employer, you are expected to be fair and just when appointing candidates to be employed. As such there should be no bias but rather the most suited person in terms of expertise, and skills should be appointed.
You can decide to start with staff on a probationary period to see how far they could go in the job role.
7. Create an Employee handbook
An employee handbook should be created. This should contain important information that employees must always be aware of including the company policies, holidays, how to avoid conflict within the workplace, the company’s aims and goals and so on. Apart from other statutory documents that should be made available to be reviewed by new employees, they should also be given the employee handbook.
Advantages of Having Employees in Your New Limited Company
Employing staff in your new limited company comes with a lot of advantages. Here are some of them you should know.
1. Brings new ideas and creativity to the company
When you introduce employees to your new limited company, then you are invariably inviting new ideas and creativity within the company. With that, it becomes easier to achieve the company’s aims and goals. Moreover, the company would be able to solve problems much easier and achieve better results than before.
2. Increases the skillset
As a company, you would need several skills for you to stay productive. When you only run the business, it could be quite difficult for you to carry out several business activities as you might not have all the skillsets needed. Employing new talents with varying and special skill sets makes you stay productive and competitive within the industry. More so, hiring experienced employees who had previously worked in a similar or the same industry as your business would be a valuable asset for your company.
3. Reduces workload
Depending on the nature of your business, you could have several business operations and activities to carry out. Having to do a lot of things alone within the company could wear you out. And as a new limited company, you would be faced with so many activities after your company has been incorporated. As such, employing new employees could help reduce the workload.
4. Increases productivity
Once you have employees working for your business, the rate at which you achieve the company goals increases. If you are a manufacturing company, then you are most likely to produce more output within a given period of time. Having two or more people working for your company helps you get results faster. And with that, you can meet up with the demand of the customers and the public as a whole.
5. Better cash flow
Increased productivity allows for a better cash flow. Without employing the required employees, it could be difficult to meet up with all the business activities and operations which could in turn affect productivity. Once productivity is affected, cash flow would reduce and vice versa.
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Conclusion
Apart from ensuring that you select the best candidate when employing staff in your new limited company, you should also take cognizance of all the legal requirements to avoid facing penalties. So be sure to comprehend and follow the points discussed above. If you have any questions on how to to employ staff in your new limited company, don’t hesitate to contact us here, and we’ll do everything we can to help.