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Becoming employers Business success HMRC

How did we come to this?!

Somehow, we have become employers of TWO people.

This shocking development was what we needed – we wanted – needed – to build a team of Dean plus two – but even so, this is getting scary!

Scary and exciting!

Our second employee’s name also begins with C, so from now on I will call employee one C1 and employee two C2. Just chronologically, to be clear, there is no favouritism here.

Our hiring process looks nothing like this!

We Need to Grow!

We were both very conscious that the only way to grow was to add numbers. The eventual plan being for Dean to be able to step back and come off the tools and into a more management role.

So, we need to build a team we can trust and who know each other and work well together.

Our first foray into the world of employment went unbelievably well – rather a non-event for everyone except us, if I’m honest. We managed to absorb the wage. The holidays, the sickness, the responsibility for another human being was a bit of an eye-opener, and I wrote about doing my own payroll and what I would say to someone wondering if payroll is easy to do here. C1 was on the whole an easy first employee – loyal, reliable and a decent chap. He was and still goes at a frustratingly slow pace sometimes, and that’s something we need to work on with him. But, generally all has gone well.

So now that we have two people on the books does that mean double challenges? Certainly the dynamic in the team has changed, without problems so far. Having two people working for and with him will push Dean closer to a management style, even if he doesn’t realise it.

And of course, it means finding three wages every month, not just two (Dean is on the company payroll, even though he is a director).

Employing people is not cheap. On top of their salary we also have to pay their taxes plus additional tax – just for the privilege of paying them. So an employee will always cost you more than their wage. That’s something I didn’t realise.

We considered at length just working with other self-employed people. In the end, it hasn’t worked for us – there are too few available around here and they are too expensive. We both feel that the only way for us to grow is to nurture our own talent in-house.

And so – we grow! With all the new challenges and opportunities that brings. Be careful what you wish for, they say, and we certainly wished for more!

Now we just need to make sure we have the work booked in to keep the three amigos busy!

 

 

 

 

Becoming employers Hiring your first employee HMRC Start a business

No more paydays!

For years, payroll was a mystery to me.

I knew how to make payments online, of course, but how a company actually made the action of transferring sums of cash into its employees’ accounts was shrouded in the deep unknown.

 

When we took on our first employee, Craig, in July 2016, I looked into finding someone to do the act of payroll for us. I asked around.

Our accountants wanted around £250/year for the privilege of doing it. And, of course, they strongly advised we took them up on the offer.

But others, both real people and those online, assured me it wasn’t hard at all and there was no reason why I couldn’t do it.

I watched several HMRC YouTube videos which helped explained the process.

The advice team at the Federation of Small Businesses, which we had joined a couple of months previously, were really helpful. (I recommend joining this fabulous organisation if you are considering going into business, if only for the free legal advice line alone).

And so I downloaded HMRC’s free software, Basic PAYE Tools, and got started. It really was quite straightforward. I followed simple steps and suddenly we were away.

Things that had been completely mysterious to me before suddenly started to come clear. A tax code is the bracket each person is put in so HMRC knows how to tax them. The amount of National Insurance and Tax that needs to be paid is clearly outlined to you once you have inputted those details. Payroll is paid when a finger on the hand of a person’s hand presses the ‘Pay’ key. Quelle mystique!

And so we continued. Until things got a little more complicated. Basic PAYE Tools is fabulous, but it doesn’t allow you to print payslips, and, try as I might, I could not find payslip software that worked with Apple Mac.

Then when we registered our new limited company this summer we decided Craig should be dismissed from the partnership business we had previously run, and be immediately hired by the limited company. In an attempt to tidy up the payment process, I set up payroll on Xero, the online accounting system we started to use round about October last year.

It took me some time to get used to Xero but once I did, I found it superb – slick and straightforward. Unfortunately, the payroll section was not quite so clear. Without realising, I made a mistake that meant that Craig’s earnings from the previous financial year were added to his current earnings for this year, and on our October pay day he was taxed heavily.

It was time to let the experts take over!

Our new accountant, Mark, recommended a payroll firm and I made contact with them. Through several long conversations – the one thing you realise is that tax is a complicated subject and even the experts can need to take their time to ensure they have fully understood it – things eventually became clear.

Nothing of course moves quickly in the world of tax and HMRC. For a new accountant to deal with your affairs HMRC needs to send you an authorisation code. You then give it to the new agent and HMRC will then recognise them. It’s all standard security practice, of course, but it doesn’t half take forever when you are anxiously waiting to hear that everything will be restored with the next payday. Craig had taken the disaster pretty well but I knew his patience would not extend into a second month.

The authorisation code finally arrived two days before payday and the new accountants were able to send me proper payslips. As I printed them out, it felt like we were once again moving up another step into the world of running a successful business.

So am I glad I decided to do our own payroll?

Yes, I am glad that I took the decision to do my own payroll – at least for a short time.

Craig, of course, may not agree with this because I know his month was a stressful one (so was mine, but differently!)

In hindsight, I enjoyed doing payroll but I am glad and relieved to have passed the responsibility on. I am so glad I did it for just over a year, because now I understand the process enough to go forward and it will help me deal with any potential future issues.

But, being very honest, handing over is a relief. No more pay day scrambles, and no more panics over getting things wrong!

One thing to remember is as an employer you are expected to be almost super human and never to get anything wrong. Employees and their family and friends have a remarkable ability to forget that employers, especially start up business owners, are people just like them, on a huge journey of learning and discovery.

The responsibility of funding someone’s life every month is a big one, and definitely, DEFINITELY not for the faint-hearted.

 

 

 

 

 

Becoming employers Business success Change your life Hiring your first employee HMRC Make money online Personal fulfillment Positive action Register a business Sole trader Sole trader vs Limited company Start a business

I’ve done it!

Today was, truly, momentous!

I received confirmation from HMRC – Her Majesty’s Revenue and Customs, no less – that my businesses are officially incorporated as Limited companies.

My online e-commerce business and my lil baby marketing company officially exist!

Because of the costs involved in running a limited company, I will actually put them into dormant mode, as soon as the paperwork arrives from HMRC (I’ve been told I can do that and I sure hope I can).

Then I’ll continue to run them both as a sole trader, until I earn enough to warrant having an accountant and doing all the regular accountancy shenanigans that a limited company would require. But at least the names will be registered.

So exciting to receive the Certificate by email, and quite emotional too… 🙂

Plus…

Our renovation business has a second employee!

The wonderful A has joined us, initially for 2 hours a week to do the paperwork, filing receipts, completing jobs and so on.

Actually it’s a role that I think will start basic but grow.

A is a formidable character who won’t be afraid to demand receipts/accounts/details from D and I – and we’ll be scared enough of her to make sure we deliver them. Just who we need to move our business forward.

I felt quite proud as I sat with her today and went through our systems. We really do have the foundations right. My very basic spreadsheets all make sense and even my colour coding didn’t look too frivolous. Now we just need to continue putting the bricks into the walls in the right order and keep building this baby 🙂

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