If you are considering taking on a new employee, it’s a sure sign that your business is growing in the right direction.
There are varying factors to be considered to avoid unanticipated problems and stress. Small business owners often struggle in the foundation phase to understand the real cost of bringing their first employee onboard.
Here are three factors to consider:
The recruitment process
For this, you may want to consider using a recruitment agency, which you may have to pay to find the ideal candidate for this position.
If you are considering expanding your business to a larger staff contingent, then you may want to advertise a human resource job. There are a range of free online recruitment portals that can be used to track potential employees. Or you could consider outsourcing your HR as a cost-effective solution.
Calculating the salary
In addition to ongoing business costs, the salary needs to be calculated to ensure that fair wages are met. Small businesses can deal with cost limitations by hiring an employee part time or hiring someone on a fixed-term contract to determine the viability of the position.
As your business grows, it is important to continually assess the whether you need an additional staff member, the hours they can work and what works with the business’s cash flow.
You need to ensure that you can fully afford to pay your employee fully every month, so be sure that your projections are in line with your projections.
Insurance and income tax
The law requires that national insurance is paid for, as if it is unpaid it can lead to serious penalties.
This also applies to PAYE income tax, which will be deducted from the salary.
If you are using the services an accountant or bookkeeper, they should be able to manage this through a payroll system.
This investment is worthwhile to ensure that you adhere to the legal requirements of running your business.
In conclusion, the biggest implication of employing someone is how much of your time they will take up.
The initial induction is the most important factor in ensuring that they understand the business and the corporate culture.
This also comes with paperwork and clarifying business needs so be sure to consider these important aspects of hiring your first employee.