Business Finance for recruiting staff

Are you ready to expand your business and become an employer?

Taking on new staff is a business finance investment. You should never be afraid to employ a person who is more experienced or who you perceive to be cleverer than you - you can't be an expert on everything. However, if you're ever tempted to employ anyone for reasons other than sound business commonsense, such as a friend or relative, don't!

If you are a first time employer, there are certain terms and conditions of employment you must meet. Advice on employment issues is freely available from ACAS, the DTI or an organisation such as Business Link. It is advisable to make yourself aware of your obligations as an employer, and factor them into your business finance plan. These include such aspects as insuring your employee against accident or injury in the workplace, your employee's maternity, paternity or adoption leave rights, payment of at least the statutory minimum wage, and the employee's right to statutory sick pay and holiday entitlement.

A business finance obligation for an employer is the payment of tax and national insurance. You will need to register with HM Revenue and Customs (HMRC) and set up a payroll to deduct tax and national insurance, which you then forward on to HMRC.

An alternative to taking on an employee is to use a freelancer or outside contractor, and the advantage is that in many cases they look after their own tax and national insurance. However, there are certain circumstances where they may qualify as workers and you should take professional advice to make sure that you're not inadvertently defrauding the tax office or depriving the worker of rights or entitlements.

Recruiting your employee. If you are taking on an employee due to increased workload, you need to return to your business plan in order to re-evaluate the company's needs. Has the skill requirement altered due to a change in the marketplace? Do you have sufficient business finance available to accommodate an additional employee? And where do you start looking for a suitable employee? Personal recommendation is an ideal solution to filling a vacant role, but you might need to consider the cost implications of advertising in a local or trade paper, or using a recruitment consultant or employment agency. Before you start you must know exactly what your company needs, however you may find someone who brings skills that would benefit your business that you hadn't previously thought of.

Every employee employed for over a month is entitled to a written statement of employment. This sets out the conditions of employment including details of hours of work, holiday entitlement and period of employment. There should also be a copy of disciplinary procedures. Once again, drawing up these documents needn't impinge on your business finance planning as there are standard documents available from the DTI website. Alternatively, speak to your solicitor about drawing up a suitable contract of employment.

By law you are required to undertake a health and safety risk assessment if you are an employer, and ensure that levels of hygiene and comfort are maintained in the workplace. Your business finance plan should include provision for buying equipment that meets health and safety standards, such as a suitable chair for an employee who works at a desk. This may sound obvious but there are long-term health issues associated with ill-equipped workplaces.

Finally, aim to be a good employer. Staff who work in pleasant surroundings, receive good remuneration and are generally treated as a valued member of the team are much more likely to remain loyal and hard-working. This in turn is good for business, and a productive working environment.

For more information about finding the right business finance for your business, contact DIYfunding through our website at www.diyfunding.co.uk.

Keith Park