The three key points to consider when funding and hiring new Employees

The first question is whether you truly need to add someone to your payroll. Employees typically have a minimum contracted number of hours, which makes them a fixed cost. You’ll need to be confident you have enough consistent work to justify that expense.

Some tasks may be better outsourced — for example, many administrative or finance functions can be handled by external specialists. You could also explore using agency workers or self-employed subcontractors to test the waters. This can help you gauge how many hours you actually need before committing to a permanent hire.

However, be aware: if you treat a subcontractor like an employee, employment law may still apply — including rights to holiday pay, sick leave, and other benefits. Always clarify the legal status of any worker before you hire.

Small business owners often start by looking close to home — perhaps involving a spouse or older children. While this can work, remember that all employment law applies equally to family members, including minimum wage rules and holiday entitlement. HMRC will also challenge artificially high salaries paid to relatives that aren’t in line with their role.

Apprenticeships are another option. They can be cost-effective and may come with grant funding, but they require a commitment to training and supervision — meaning you may not free up your own time immediately.

If you need experienced staff, job boards and recruitment agencies remain reliable sources. Networking through your industry contacts can also uncover strong candidates.

Hiring brings payroll responsibilities and tax obligations. You’ll need to make monthly submissions to HMRC, deduct PAYE and employee National Insurance Contributions (NICs), and pay these over to HMRC.

On top of this, employers also pay Employer’s NICs at 15% on salaries over £5,000 per year. However, there is an “Employment Allowance” which exempts the first £10,500 of Employer’s NICs each tax year for companies with more than just one Director employed. This is not automatic and needs to be claimed.

When deciding a salary, consider two factors:

• Market rate — research comparable roles via job listings and industry conversations.
• Affordability — project your profits to determine what the business can sustain, factoring in Employer NICs, pension contributions, and training costs.

By mapping out how much extra income your new hire would need to generate to maintain or grow your profit, you can set a realistic, sustainable salary.

Before hiring, make sure you’ve assessed the need, identified the best sourcing options, and fully understood the financial implications. Careful planning at this stage can make the difference between a hire who fuels your business growth — and one who becomes an unexpected burden.

Let’s talk about your business goals — and how we can make them happen together, get in touch.