Can a sole trader have employees? Explained – How a sole trader can employ staff

Last checked and updated on 21 June 2022

The UK is a nation of entrepreneurs. According to the Office for National Statistics, there are currently more than 5.5 million self-employed people in the UK – making up 15% of the workforce. Of these, around 90% are sole traders. So, if you’re thinking of starting your own business, it’s likely that you’ll be considering becoming a sole trader.

If you are a sole trader in the UK, you may be wondering if you can employ staff. The good news is that you can – but there are a few things you need to know first. In this article, we will explain how a sole trader can employ staff, and outline the process for doing so. We will also discuss the benefits of having employees as a sole trader, and outline some of the challenges you may face. Let’s get started!

Making employment decisions

As a sole trader, you are in charge of your own business. This means that you are the only person who makes decisions about your business, and you are responsible for its success or failure. One of the benefits of being a sole trader is that you have complete control over your business – including who you employ.

How to get started with employing your first staff for your sole trader business

If you decide to employ staff, there are a few things you need to do. First, you will need to register as an employer with HMRC. This can be done online, and you will need to provide some basic information about your business, such as your business name and address.

You will also need to obtain Employer’s Liability Insurancethis is a legal requirement in the UK, and it will protect you financially if one of your employees is injured or becomes ill as a result of their work.

Recruiting your first employees

Once you have registered as an employer and obtained insurance, you can start the process of recruiting staff. This will involve advertising your vacancies, interviewing candidates, and selecting the right person for the job.

Once you have employed someone, you will need to pay them a salary, and deduct income tax and National Insurance contributions from their wages. You will also need to provide them with a written contract of employment, which outlines their duties and responsibilities.

The upsides to hiring staff to support your sole trader business

There are many benefits to employing staff as a sole trader. Having employees can help you to grow your business, and to take on larger projects. Employees can also help to take some of the workload off your shoulders, and free up your time to focus on other aspects of your business.

The challenges of employing people as a sole trader

Of course, there are also some challenges associated with employing staff. One of the biggest challenges is that you will be responsible for their well-being – both physically and mentally. This means that you will need to provide them with a safe working environment, and ensure that they are happy and healthy in their work. You will also be responsible for their training and development, and for keeping up to date with employment law.

Best payroll options for sole traders – software vs outsourcing

When you employ staff, you will need to set up a payroll system to pay them. There are two main options for doing this: you can either use payroll software, or outsource your payroll to a specialist company.

Payroll software is a good option if you have a small number of employees, and if you are comfortable managing your own payroll.

However, it can be time-consuming, and it can be difficult to stay up to date with the latest payroll legislation. If you have a large number of employees, or if you want to free up your time to focus on other aspects of your business, outsourcing your payroll may be a better option. There are many specialist companies that offer payroll services, and they will take care of all of the administration for you.

Additional considerations – pensions, sick pay, maternity pay, and more

Once you have employees, there are a few additional things you need to think about. For example, you will need to provide them with a pension scheme, and you will need to pay statutory sick pay and maternity pay if they are eligible for it. You will also need to comply with health and safety legislation, and employment law.

Final thoughts

If you’re thinking of employing staff as a sole trader, we hope this article has been helpful. Remember, you can always speak to an accountant or business advisor for more information and advice. They will be able to help you with the process of registering as an employer, and can offer guidance on other aspects of employing staff. Thanks for reading!

Frequently asked questions

Can a sole trader have employees?

Yes, a sole trader can have employees. In order to do so, they will need to register as an employer with HMRC and obtain Employer’s Liability insurance. They will also need to provide their employees with a written contract of employment.

Can a sole trader employ staff?

Yes, a sole trader can employ staff. In fact, many sole traders do employ staff to help with the running of their business. There are a few things to bear in mind if you’re thinking of employing staff as a sole trader, though.

Can I employ my spouse or partner?

Yes, you can – but there are some restrictions. For example, they will not be able to work more than a certain number of hours per week, and they will not be entitled to the same benefits as other employees (such as paid holidays).

I’m not sure I can afford to pay someone a salary. Can I employ them on a commission-only basis?

No, you must pay your employees at least the National Minimum Wage. This is currently £9.50 per hour for adults aged 23 and over. You cannot employ someone on a commission-only basis – they must receive a salary.

Do I have to provide my employees with a written contract?

Yes, you must provide all employees with a written contract of employment. This should outline their duties and responsibilities, and should be signed by both you and the employee.

I’m worried about being sued if one of my employees is injured at work. What can I do to protect myself?

You will need to take out Employer’s Liability insurance, which will protect you financially if one of your employees is injured or becomes ill as a result of their work. This is a legal requirement in the UK.

I’m not sure I’m ready to take on the responsibility of employing staff. Are there any other options?

You could consider hiring self-employed contractors, rather than employees. This can be a less risky option, as you will not be responsible for their training, development, or well-being. However, you will still need to ensure that they have the necessary skills and experience to do the job. You can find out more about hiring self-employed contractors here.

Where can I get more information and advice on employing staff as a sole trader?

You can speak to an accountant or business advisor for more information and advice. They will be able to help you with the process of registering as an employer, and can offer guidance on other aspects of employing staff. You can also find more information on the GOV.UK website.

Important – The information provided in our articles is intended to be for general purpose use only, and not advice for you or your business. We strive to publish accurate information, but encourage you to fact-check and seek expert guidance. We recommend that you always speak to a qualified professional to get advice about how to operate your business under your specific requirements and circumstances.