If you’re committed to a path of growth and development, there will come a time when it’s difficult to accomplish all your small business tasks alone. While outsourcing might work well for reaching marketing goals and updating your web design, a freelancer is unlikely to be able to support you in the same way a full-time employee can.

After all, freelancers must divide their time between clients and may be reluctant to chip in with jobs outside their remit – an ambitious employee that cares about your business will do all this and more. Employees are certainly more permanent fixtures and help your business to achieve more stability.

However, hiring your first employee isn’t as simple as finding a contractor. It’s an incredibly exciting step to be taking, but it isn’t one you want to approach in the wrong way. Take a look at the following tips to make sure your hiring process is as smooth as possible.

Know your taxes

One of the most daunting parts of hiring an employee is all the tax implications it comes with. Fortunately, with a little bit of planning and the right accounting software, it’s relatively easy to handle everything from processing a P46 statement to sending out payslips.

Before any of that though, you need to register yourself as an employer through the government’s website. This will only take a couple of weeks to go through, after which you will be able to register your chosen employee with a Full Payment Submission. Most employees will have a P45 that you can use to complete this process, but if they’ve never had a job before, you will need to give them a new starter checklist, also known as a P46.

Make sure you register your employee within 30 days of their start date. Not only will this help you to avoid a fine, but it will also make sure your employee pays the correct amount of tax, national insurance and student loan repayments (if applicable).

Verify an employee’s right to work

As part of your screening process for new hires, it’s important to check whether a potential candidate has the right to work in the UK. Hiring someone without completing this step can make things very complicated and could even land you in trouble with HMRC, who can fine businesses £20,000 for hiring staff that can’t legally work in the UK.

Luckily, it’s easy to verify whether an employee is allowed to work in the country. Start by collecting some official identity documents, such as a passport for UK citizens, a visa, immigration letter, or certificate of permanent residencefor candidates that are citizens of other countries.

Check these documents carefully to make sure they’re not expired and match all the other information you have about the candidate. Some visas have restrictions on work, such as the number of hours a person is allowed to work, so pay close attention to these sections.

Finally, once you’re happy that all the documents are authentic and allow your employee to complete the job you’re hiring them to do, make some copies for your records. Keep these records for the entire duration of the employee’s time at your company and a minimum of two years after they have left.

Take out employer’s liability insurance

Always take out employer’s liability insurance before hiring an employee for the first time. Never wait until your employee has already started work, as you legally have to have this cover up to at least £5 million. If you fail to take out insurance until after you’ve hired a member of staff, you could be required to pay £2,500 for each day you weren’t insured.

Some circumstances don’t require employer’s liability insurance, but it’s always important to check regulations carefully. Even if you only hire self-employed contractors, you may need insurance depending on the work they do.

After taking out insurance, you must have the certificate on display or within easy access so that all your employees can see the details of your policy. This can be in a physical or digital location as long as it’s constantly available for employees to view when they wish.

Create an employment contract carefully

Failing to create an employment contract that encompasses all your expectations as an employer may result in difficulties further down the line. There should be no disputes as to what is required of your employee in their role, so make sure any contract your draw up includes:

The date your employee will start work
A job title along with a brief description of what the role entails
Their place of work and whether the role allows for remote working. If remote working is permitted, include any restrictions surrounding this (such as how many days per week/country of residence)
Total working hours and the times employees are expected to be at work. Include any flexible working provisions here.
The salary your employee will be paid and whether it will be paid weekly or monthly and on which date.
Number of holidays and bank holidays employees will receive. Stipulate whether employees will be allowed to buy additional days or roll holidays over into the following year. Make it clear whether holidays are calculated based on the calendar or financial year.
Probationary conditions and an end date for this period
Notice period for both the employer and employee

As you hire more employees, your contracts may change over time. It’s important to ask all employees to sign up-to-date contracts if major changes are being made to the terms. Never rely on e-mail communications or verbal conversations to convey job expectations, as these aren’t legally enforceable. What’s more, you must provide employees with an employment contract within the first two months of their start date, otherwise, you will be in breach of the law.

Improve your hiring process one step at a time

Hiring a new employee involves a lot of considerations, not to mention everything that comes with finding promising candidates in the first place. However, by taking the process step by step, you can reduce your risk of making little mistakes and ensure everyone involved is clear on what’s expected of them.