Are you at the point in your business growth where you’re overwhelmed with work, and you’re ready to take on your first-ever employee?

If so, congratulations!

That’s a phenomenal achievement, and you should feel extremely proud of yourself.

Preparing to hire an employee is a big milestone, and there’s a lot to consider before you make your final decision. Becoming an employer has huge legal responsibilities, which is why we’ve sat down with Jo to talk about everything that you need to know.

This should give you some really helpful advice, but we’re always here to answer your questions if there’s anything specific you need to know.

Thanks for sitting down with us, Jo. We know there’s a lot to think about, so let’s start with the most obvious question – how will a business owner know if they are ready to hire their first employee?

“There’s rarely a perfect time to hire, but there are a few signs that your business is ready. For example, if you’re under constant pressure and struggling to keep up, it could be a sign that you need extra support rather than that you are just in the middle of a temporary busy spell. You may also find that you’re turning down work or missing really good opportunities because you don’t have the capacity to take them.

Before you decide, you need to have a good look at your finances too. Ideally, you should have a prolonged, steady income, not just a good month or two, so you can feel confident about taking on the ongoing cost of an employee.

Finally, think about what your new hire would actually do. If you have a list of regular tasks or responsibilities you can hand over, you’re much more likely to make the hire a success.

Your decision should come down to this key point. If extra help would free up your time, help you grow and stop opportunities passing you by, it may be time to take that next step.”

Can businesses afford to hire someone?

“Hiring a new member of staff is expensive, there’s no doubt about that. When you take on your first employee, it’s easy to think that the only outgoing is the salary, but it’s much more complicated than that. You need to remember to factor in additional costs such as employer National Insurance contributions, pension contributions, insurance, holiday pay and sick pay. You’ll also need to consider any equipment they need to do their job, whether that’s tools, a vehicle, a desk or a phone.

As part of your financial calculations, don’t forget to build a buffer into your budget. That way, you’ll know that all your costs are covered during quieter periods. And remember that a new employee may need training and support when they first join, which can lead to extra costs and reduced productivity in those early months.

A good starting point is to speak to your accountant, who can help you budget and forecast future costs. If you don’t have an accountant, we can help point you in the right direction.”

Should you hire a full-time employee straight away?

“Not necessarily. The right approach will depend on the amount of work you have available, what your business can afford, and your long-term plans for scaling up your company.

For some businesses, it can make sense to start with part-time, freelance or contract support. But it’s worth remembering that there can be a fine line between an employee and a contractor, so it’s a good idea to seek advice if you’re unsure which arrangement is right for your business.”

What do businesses need to do to set up as an employer before hiring someone for the first time?  

“Before your first employee starts, there are a few important things you need to have in place.

Firstly, you’ll need to register as an employer with HMRC and set up PAYE so you can manage tax and National Insurance correctly. Payroll and tax reporting need to be in place from day one, so many business owners choose to use payroll software or work with an accountant to help manage this.

Secondly, you’ll need to make sure that you have a clear employment contract, a job description and some basic workplace policies. If you’ve got those from the outset, both you and the employee will have clear expectations and will know their responsibilities.

It’s equally important to understand your legal obligations as an employer. Employment law can be complex, and a lack of knowledge won’t protect you if issues arise later, including in an employment tribunal.

If this sounds daunting, it doesn’t need to be. Why not download our Simple Steps toolkit to help you manage the process? It’s designed to give you everything you need when taking on your first employee.”

How can businesses avoid hiring the wrong person?

“There’s no way to guarantee every hire will be the perfect fit, but there are a few things you can do to limit your risk and make the transition easy for you and your employee.

You need to start by being clear about what the role involves and what skills, experience and qualities you’re looking for. That’s why a well-written job description and person specification will help attract the right candidates from the outset. If you’re unsure what to include, seek advice rather than relying on generic templates.

I always tell businesses not to rush the process.

Recruitment can take longer than people expect, but taking the time to advertise properly, shortlist candidates, and carry out structured interviews can help you make a more informed decision.

When you have chosen an employee and they’ve started working for you, make sure you have a clear probationary period in place, with regular check-ins and reviews. This gives your new employee the support they need while helping you assess whether the role is working as expected.

But the most important advice I can ever share is to remind you that if any concerns arise, don’t ignore them. The best thing you can do is seek advice early and address issues promptly. That will usually lead to better outcomes.”

What mindset shift should business owners expect after hiring their first employee?

“Hiring your first employee is about more than growing your team. It also changes your role as a business owner, and that shift can take some getting used to.

Instead of spending all your time doing the work yourself, you’ll spend more time working on the business and helping others succeed. Your time will naturally shift from simply getting things done yourself to achieving results through others. This is a big change, and to do this effectively, you need to set clear expectations with your employee, provide them with the support they need and create an environment where people can do their best work.

You’ve spent so long working on your business yourself that it’s hard to suddenly work as a leader, whether you’ve had that title before or not. All of a sudden, the way you communicate, solve problems, and behave day to day will help shape your business culture and set the standard for others to follow.

And of course, you have more responsibilities than ever before.

As an employer, you’re responsible not only for the work being done but also for your employees’ well-being, safety, and development.

This is all a huge change, but if you’re aware of it from the outset, you’ll be better placed to make it work.”

What are the biggest surprises about managing people?

“Many business owners are surprised by just how much responsibility comes with having employees. Even if you’ve been a manager beforehand, there’s a difference between managing a team for an employer and being the employer.

You’ll quickly become the person people turn to for answers, support and decisions. Whether it’s a problem at work, a question about priorities or an unexpected challenge, your team will look to you to figure out the answers.

There will also be inevitable times when you’ll have to make difficult decisions. That might involve handling performance issues, resolving conflicts, or making changes in the business; not every decision will be easy, and you’ll have to accept that you won’t always be liked.”

What do most businesses get wrong about their first hire?

“One of the most common mistakes is hiring too early, before cash flow is stable enough to support the additional costs comfortably. While it’s tempting to bring someone in as soon as things get busy, it’s important to be confident that your business can sustain that investment over the longer term. As I mentioned earlier, you need to speak to your accountant to make sure you haven’t overlooked employer costs such as National Insurance, pensions, training, and equipment, as well as the time required to recruit, onboard, and support a new employee.

You also need to recognise that you have a vested interest in your business. Employees won’t care about your business in the same way you do. Of course, you want them to be highly committed and motivated, but business owners and employees will naturally have different perspectives and priorities.

Finally, some businesses don’t put clear systems and processes in place early enough. Having straightforward processes from the start helps new employees settle in more quickly. It prevents any confusion and makes it easier to maintain consistent standards as the business grows. That’s why we created our Simple Steps toolkit, so that consistency was there for you.”

What HR basics do businesses need to get right from day one?

“I’ve worked in HR for a long time, and I know that getting the basics right from the start can save a lot of time and headaches later on.

Firstly, you need to ensure your employee has a clear written contract that sets out their terms and conditions of employment, along with a job description, so they understand what’s expected of them.

Then, you’ll need to make sure payroll is set up correctly and that you’re reporting earnings, tax and other deductions properly from day one. It’s important to check that you’re meeting legal requirements regarding pay and providing the correct annual leave entitlement. The Employment Rights Act has recently changed significantly, but we regularly share updates on our blog. Make sure you keep checking it, and don’t be afraid to ask us any questions if you’re not sure about anything. It’s always better to ask for clarity rather than assume something.

Finally, put some simple workplace policies in place covering areas such as conduct, attendance, disciplinary matters and grievances. These don’t need to be overly complicated, but they give both you and your employee a clear framework to work from if issues arise. This is covered in our Simple Steps toolkit.”

How do I manage performance or issues fairly?

“Managing performance doesn’t need to be complicated, but it does need to be consistent. As I’ve mentioned throughout this article, make sure you start with a clear, up-to-date job description so everyone understands what the role entails.

I also recommend agreeing SMART objectives that are specific, measurable, achievable, relevant and time-bound. If you combine good communication with the right support and training, you can often prevent small issues from becoming bigger problems.

Another tip is to focus on your record-keeping. Ideally, you want to record all training opportunities, performance plans, and any issues or feedback to get a clear picture of employees’ progress over time. If you do need to address any performance issues formally, those records can be invaluable.

But the most important reminder is that you should never guess or assume what something means in employment law. Rules and best practices change over time, so if you’re unsure about how to handle a situation, seek professional advice before taking action.”

Talk to MossHR or download our Simple Steps toolkit

Hiring your first employee is an exciting milestone, but it’s also a significant responsibility. With the right planning, clear processes and a good understanding of your obligations as an employer, you can set both your business and your new employee up for success. If you’d like support at any stage of the process, we are always happy to help.

Alternatively, why not make it easier for yourself with our Simple Steps toolkit? It gives you ready-to-use contracts, policies and onboarding documents that are kept up to date with current legislation.

Your paperwork will be continually updated and amended, ready for you to download as and when you need it. For just £450 plus VAT, you will have a 12-month subscription that includes ongoing updates, so your employment documents have everything you need to make it easy for that very first hire.