Why this matters more than most founders expect.
There's a version of "my first hire" that goes smoothly, and a version that creates three months of administrative firefighting. The difference is almost always preparation, not the person you hired. I've seen Kent tradespeople take on a first apprentice and get it right first time, and I've seen service business owners who were trading happily for years suddenly buried in PAYE confusion and a contract dispute they didn't see coming. The underlying work is not complicated. It is just unfamiliar, and nobody tells you about it until it's too late.
Being a sole trader or a limited company director who only draws dividends is a very different thing from being an employer. The moment you pay someone a wage, HMRC treats you as an employer. That status comes with obligations that start before your new person walks through the door.
Register as an employer with HMRC before day one.
This is the one that catches people most often. You cannot just start paying someone and sort the paperwork later. You need to register as an employer with HMRC before the first payday — and HMRC recommend doing it up to four weeks in advance. The registration gives you a PAYE reference number, which you need to run payroll. It takes about fifteen minutes online at gov.uk. It is free. Do it the day you decide you're definitely hiring, not the week before they start.
Once you have the PAYE reference, you also need to decide how you'll actually run payroll. For a single employee, something like Xero Payroll, QuickBooks Payroll, or even HMRC's own Basic PAYE Tools (which is free) will handle the calculations. The monthly or weekly submission to HMRC is called an RTI — Real Time Information — filing, and it goes out every time you pay someone. Miss it and you'll get a penalty notice. It sounds more complicated than it is once it's set up, but it's not a thing you should be doing manually in a spreadsheet.
Get a written contract in place before they start, not after.
In the UK, employees are legally entitled to a written statement of employment particulars on or before their first day. Not in their first week. Not when you get round to it. Day one. That statement needs to include things like pay, hours, holiday entitlement, notice period, and job title. For most small businesses, a straightforward employment contract covers this, but the contract and the statutory statement are slightly different things — your contract should contain everything in the statement, and usually more.
I am not an employment solicitor and you should take proper advice if the situation is anything other than straightforward. For a standard part-time or full-time hire, a template employment contract from ACAS (the Advisory, Conciliation and Arbitration Service) is a reasonable starting point, and it's free. Mind you, if you're in any doubt — particularly around restrictive covenants, intellectual property, or commission structures — £200 to £300 spent with an employment lawyer before signing anything is money very well spent.
Work out what you're actually legally required to provide.
The list is longer than most people realise going in. Statutory minimum holiday is 5.6 weeks per year for a full-time employee (that includes bank holidays if you count them in). You need to enrol eligible employees into a workplace pension — usually from their first day of employment if they're over 22 and earn more than £10,000 a year — under auto-enrolment rules. You need Employers' Liability insurance, which is a legal requirement the moment you have any member of staff, and the certificate must be displayed (digitally counts). The minimum level of cover is £5 million, though most policies start at £10 million as standard.
None of these are optional, and none of them are difficult to arrange — but you cannot do them on the morning someone starts. Build a short checklist and work through it in the fortnight before their first day.
Think about your systems before you think about the person.
This is the thing I wish someone had told me earlier. The instinct when you decide to hire is to focus entirely on finding the right person. But if the systems they'll be working with are a mess — if your booking process is a WhatsApp thread, your invoicing is a Word document saved on your desktop, and your customer records live in your head — then you're not onboarding an employee, you're onboarding someone into chaos and hoping they can make sense of it.
Before you hire, spend two or three days writing down what the job actually involves, step by step. Not a job description for a recruitment ad — a genuine account of what the person will do each day, what tools they'll use, and what a good outcome looks like. This exercise is useful for three reasons: it tells you whether the role is actually coherent, it gives you the basis for training them, and it forces you to notice all the things that currently live in your head and need to be written down somewhere accessible.
For a lot of the Kent SMBs I work with, this is also the point where it becomes obvious that some of what they were planning to hand off could be automated instead — not to replace the hire, but to make that person's time more valuable from day one.
Have an honest conversation about money before you post the job.
The National Living Wage (for workers aged 21 and over) is £11.44 per hour from April 2024. That is the absolute floor. But the total cost of employment is always higher than the gross salary — factor in employer National Insurance contributions (13.8% on earnings above the secondary threshold), pension contributions (minimum 3% employer contribution under auto-enrolment), and any benefits you're offering. For a full-time employee on £25,000 gross, the true cost to the business is typically around £28,500 to £30,000 once you include NI and pension.
None of this is a reason not to hire. It is a reason to know your numbers before you commit. If the business cannot sustain that cost for at least twelve months even if revenue flatlines, the timing is probably wrong and you may be better off with a part-time arrangement or a well-scoped contractor relationship to begin with.
Understand the difference between an employee and a contractor.
Some businesses try to sidestep employer obligations by engaging people as self-employed contractors. Sometimes that is entirely legitimate — a graphic designer you use for three projects a year, for example. But if someone works regular hours for you, uses your tools, is told what to do and when, and cannot send a substitute in their place, HMRC is likely to consider them an employee regardless of what the contract says. The IR35 rules exist precisely for this, and the consequences of getting it wrong — unpaid tax, National Insurance, penalties — can be substantial.
If you're unsure, HMRC has a tool called CEST (Check Employment Status for Tax) on gov.uk that gives you a reasonable steer. It is not definitive, but it is a sensible first check. Honestly, if you're in any doubt, a single conversation with an accountant is worth more than an hour of reading guidance online.
Get your onboarding week planned out before they arrive.
The first week sets the tone. I have seen too many small business owners say "just watch me for a few days" and then be too busy to actually explain anything properly. The person arrives, watches, nods, and leaves on Friday knowing less than they should. Three weeks later, they're still not really useful and both sides are quietly frustrated.
Write a simple day-by-day plan for the first five days. It doesn't need to be elaborate — a list of what they'll learn each day, who they'll meet (if anyone), and what they should be able to do independently by the end of the week is enough. It forces you to think about what "up to speed" actually means for this role, and it gives the new person a sense that they've joined something organised. That impression, in the first week, matters more than most employers realise.