Who'd be an Employer

Vast amounts of new legislation and ever tightening Inland Revenue rules about using subcontractors mean that the badly advised business is walking a tightrope. The minimum wage, working time directive and an increasing number of penalties for late returns have increased the burden considerably.

An organised approach to employing staff is essential and first time employers should consider the following:

1. Once you have registered for PAYE you should consider purchasing payroll software or employing someone to carry out your payroll. Using the Inland Revenue manual PAYE tables is time-consuming and difficult.

2. List out the important terms of the new employment. Consider all the issues which have been the subject of misunderstandings and disagreements in the past.

3. Obtain an example contract that includes all the other relevant terms that you may not have yet considered.

4. Ensure all the terms that now contained comply with all recent employment legislation Of course many small businesses take on workers without following any of the above.

Typically, they pay someone on a self-employed basis. Therein lies the biggest risk of all. At a later date should the Inland Revenue determine that the individual concerned was not genuinely self-employed but was really a shadow employee then the amounts paid will be deemed to be net wages and a large tax and National Insurance bill will follow.