Becoming an employer is one of the most significant milestones for business owners and managers. It's one of the indicators that the business is taking progressive strides in pursuing predetermined business goals. As exciting as this can be, one thing people often fail to consider is the demand that accompanies being an employer.
One of those demands are the hidden costs incurred to retain the services of employees. These costs may include wages, infrastructure, payroll management, and pension scheme. Effectively managing all these is no little feat, and that's why you need to know the costs before you become an employer.
The Costs of Becoming an Employer
Once you take on your first employee, you are not only responsible for paying their wages, but there are also many other considerations with potential cost implications.
Payroll service providers can help you set up your pension auto-enrolment that will work for all employees as soon as they resume work. However, payroll management comes at a cost which includes the time taken to run it and paying your 2% minimum contribution to the scheme. In addition, you also have to pay the Employer's NI to HMRC for each of your employees monthly or quarterly.
Another cost of becoming an employer is Statutory Sick Pay (SSP). It's an entitlement you must pay to all sick employees. Whilst overall sick days are extremely low in the UK; most employees still average 4.3 sick days off per annum.
There's also the cost of holidays that includes payment for employee holiday entitlement, including eight statutory days entitlement for all employees. Even if your employees are part-time, they are entitled to this.
Statutory Maternity Pay (SMP) is another cost you'll incur as an employer. It involves 90% of the employee's average weekly earnings (before tax) for the first six weeks.
How to Manage the Cost of Becoming an Employer
All things considered, you may realise that the cost you'll incur to become an employer becomes more significant than expected. If you find this daunting, outsourcing is a viable way to manage these costs. For example, you can outsource multiple business operations, payroll management, human resource management, accounting, and marketing, among others.
While noting all the costs of becoming an employer can be tough to keep up with on your own, you can take advantage of the services of payroll professionals like Pay Check. With Pay Check, you'll get market-leading services delivered by highly experienced and passionate experts in payroll administration, helping you to manage costs, reduce your team’s workload and remain compliant with all current regulations. Whether you're running a small or large business, Pay Check has custom solutions for your problems.
You can get started with fully managed payroll services quickly. All you need to do is contact us so we can help you explore how you can leverage our services for your business growth.