Help needed with expanding business and taking on 1st employee!

**dancingbutterfly**

Hi guys,




I need a lot of advice as you will soon find out!

I have been running a small but successful cleaning business in my local area. First just cleaned houses now I clean communal area's in new housing developments as well as more houses.

I am now unable to do all this work myself as Im getting more work all the time, Ive just had a lady on the phone offering me 13 houses if she is pleased with my work on her own home this week!

I want this work and I want to employ someone to help.

I want to do this all legally and through the books and haven't got a clue where to start! Ive been reading HMRC site about registering as an employer and paying my employee etc but there's so many options I just dont know where to start!

At the moment the business is solely me, I run it and do the 'work' so to speak.

I am registered as self employed and complete self assesments and am insured for public liability which covers me in someones home/office.

My questions are;

What to I have to legally do to be an employer and employ someone?


What insurance do I have to get? Can my public liability cover my employee in the work areas?


Any other advice will be greatfully received

Thanks very much for reading.

phill99

You have 2 options:

1) you can employ somebody directly. You will need employers liability insurance. Thisis an absolute muskt and is in place so that compensation is available if the employee suffers an injury while in your employment.

You have to pay them at least the minimum wage, agree to the Working Time Directive, comply with the Wages Act, comply with the Health and Safety at Work Act and all of its associated legislation. You will also need to pay maternity pay if the event arises. Your public liability insurance will need to be extended to cover an employee. When you pay them, you need to deduct their PAYE tax and hand it HMRC. You need to pay employers NI contributions, as well as deducting employees NI contributions and hand them over to HMRC. You have just taken on a whole host of responsibility and costings and these need to obviously built into the hourly charge that you charge a customer. So if you are paying someone say £7.00 an hour, by the time you have added all of the above, you need to be charging the end user at least say £9.00 an hour, and if you want any profit, then it's more like £11.50 an hour. Remember also if you have an employee, you need to invest in another Hoover, mops, equipment etc.

2) Take them on on a Self Employed basis. To do this properly, they would also need another client or 2. Then they are responsible for their own tax, NI, sick pay, maternity pay etc. You send them to Mrs X 10 hours a week. You charge Mrs X £10 an hour (more competitive) , and the cleaner invoices you for £8 an hour. You make £2 an hour, remain competitive, Make a profit and have none of the restrictions highlighted above.

**dancingbutterfly**

Thanks for your very helpful post phill99.


goodness me, a lot to tackle there and I only have around 5 hours of work to offer per week!

Im a bit sloppy on client charges. Clients Ive had for 3 years Ive been charging only £8 ph, whereas recent clients Ive been charging £11 ph.

I think I'll have to restructure my pricing with old clients so everyone is paying the same rate. (give or take £1!)

I get paid a lot for my communal area cleaning averaging on £60 ph, so maybe I should stop my private house cleaning if they do not wish to pay £10 ph, then fill up my time with communal area cleaning...

For example tomorrow Im cleaning a private house for 2 hours =£16, then cleaning a big development for 3 hours which pays £150 per clean!

Something needs to be sorted. I cannot keep charging £8 ph when I provide all my own materials and petrol costs etc.

I think I'll fill my days better and if I do need some help i'll find a self employed cleaner.

Does anyone have any ideas about suggesting a price increase to clients?

Many thanks again

phill99

If you are charging £8 an hour and providing materials and transport you are working for probably 30% below the minimum wage. Once you take someone on as an employee with all the associated costs, that will soon diminish to £2 an hour.

Mistral001

You are getting the commercial work because you are good and are coming in at the right price. You need to figure out a way of maintaining that standard while using an employee rather than doing it solely by yourself. This is the biggest part of moving from a one-man/woman operation to a two man/woman operation. You might have to employ a few people rather than just one and spend your time training them and supervising them so that standards are strictly maintained. Costs will go up as others have said, so make sure that you have some capital to get you over the initial cashflow problems associated with that.

Pennywise

This post is a brilliant example of why we have millions unemployed at the same time as hundreds of thousands/millions of tiny "one man" businesses that could grow.

It's going to cost the OP a few hundred pounds for employers liability insurance. If you're only making a couple of pounds per hour "profit" then it's going to take weeks/months every year just to pay the insurance. Not to mention holiday pay, health & safety, etc. Then professional fees (solicitors & accountants) etc to deal with all the formalities unless they can spare the time to do their own research - a real cost as they could be out earning money instead.

It just doesn't make sense for the OP to grow their business. It has to grow big enough to employ 3-5-7 workers before the profits make it worthwhile to take the risk.

Far better to simply give up the low paying domestic work and concentrate only on high paying commercial work, on their own. How about selling a block of domestic clients to another "sole trader" - better getting something out of it rather than just stopping and getting nothing.

The pain barrier of employing people simply isn't worth it when it's only 1 or 2 employees. You've got to stay on your own or be able to grow big enough to employ say 5 or more.

As for the self employment option of prospective workers, it's not really a viable option. Just working for more than one employer doesn't make you self employed. You have to be "in business" to be self employed, that means the likes of providing your own equipment, having your own insurance, payment by job not time, own control over how & when you do the work, etc. HMRC are very active in seeking out false self employment.

Mistral001

Pennywise wrote: »

As for the self employment option of prospective workers, it's not really a viable option. Just working for more than one employer doesn't make you self employed. You have to be "in business" to be self employed, that means the likes of providing your own equipment, having your own insurance, payment by job not time, own control over how & when you do the work, etc. HMRC are very active in seeking out false self employment.

I agree, employing self-employed people means that you become some sort of collection of people with an organiser. This will be a big turn-off for good high-paying commercial customers. It is not because they probably could get the same service from an agency, which is true, but because they are in business themselves and most-likely have considered and rejected the same option for their own business.

phill99

Pennywise wrote: »

As for the self employment option of prospective workers, it's not really a viable option. Just working for more than one employer doesn't make you self employed. You have to be "in business" to be self employed, that means the likes of providing your own equipment, having your own insurance, payment by job not time, own control over how & when you do the work, etc. HMRC are very active in seeking out false self employment.

You evidently are not self employed and don't use self employed contractors because if you did you would realise that what you say is rubbish. I regularly have self employed sub-contractors working for me. They pay their own tax and NI. They are paid for time worked (a day rate), not for the job, they start at an agreed time and finish at an agreed time. Sometimes they have their own equipment, sometimes I supply it. Sometimes they will be with me for a week, sometimes a couple of days and sometimes a few hours. But as they work for other people as well as me and for themselves (contracting to a client directly), then they are classed as Self Employed. In the 12 years I've been doing this, the HMRC have not questioned it once.

Pennywise

phill99 wrote: »

You evidently are not self employed and don't use self employed contractors because if you did you would realise that what you say is rubbish. I regularly have self employed sub-contractors working for me. They pay their own tax and NI. They are paid for time worked (a day rate), not for the job, they start at an agreed time and finish at an agreed time. Sometimes they have their own equipment, sometimes I supply it. Sometimes they will be with me for a week, sometimes a couple of days and sometimes a few hours. But as they work for other people as well as me and for themselves (contracting to a client directly), then they are classed as Self Employed. In the 12 years I've been doing this, the HMRC have not questioned it once.

Best place to look is HMRC's own guidance:-

http://www.hmrc.gov.uk/working/intro/empstatus.htm#1

Have you actually had a PAYE audit by HMRC? If not, then they won't have questioned your employment practices as they won't know how you operate.

As you see from HMRC website, simply working for other people doesn't make them self employed.

phill99

Pennywise wrote: »

Best place to look is HMRC's own guidance:-

http://www.hmrc.gov.uk/working/intro/empstatus.htm#1

Have you actually had a PAYE audit by HMRC? If not, then they won't have questioned your employment practices as they won't know how you operate.

As you see from HMRC website, simply working for other people doesn't make them self employed.

As suggested earlier, it's clear that you are neither self employed or a contractor employing self employed sub contractors.

**dancingbutterfly**

Thanks for everyone's input.

I have read it all very carefully and am greatful.

I understand what you mean Pennywise, I would love to expand my business and get my name out there more but it's having enough work to do this.

I think I'll pack more work into each day, stop cleaning (sell!) the lower domestic jobs and concentrate on well paid work.

As I am only making £10,400 pa before tax, ni and all other costs. So I should be making a lot more before employing someone. I'll be honest my work is fairly part time as I fit it around my son who's in school. So I could really make a go of it myself full time and go from there.

Many thanks again