Hiring your first employee is a massive milestone. It’s a sign your business is growing but it also comes with big decisions, new responsibilities, and, of course, financial implications.

At Curve Accountancy, we work with small business owners across Crawley, West Sussex, and the wider South East who are asking the same question:

“Is it time to bring someone on and can I actually afford it?”

This blog is here to help you answer that. We’ll walk you through:

• How to know if you’re ready to hire
• What the true cost of an employee is
• Common alternatives to consider first
• What to prepare before you make the leap
• How to structure it tax-efficiently

Is Your Business Ready to Hire?

Hiring someone even part-time isn’t just about having more hands on deck. It’s about creating capacity in your business without creating chaos.

Here are some signs it might be time:

1. You’re turning down work or missing growth opportunities

You’ve got leads coming in, but no time to follow up. Projects are delayed, customers are waiting, and your growth is bottlenecked by your personal capacity.

2. You’re consistently overwhelmed

The odd late night is fine. But if you’re regularly working 60+ hours a week just to stay afloat, you're probably stretching yourself too thin to be strategic.

3. You're doing low-value tasks that could be delegated

If your time is being spent on admin, emails, or operations instead of client work, strategy, or sales that’s a red flag.

4. Your revenue is consistently stable or growing

Hiring someone is a commitment. If you’ve had 6–12 months of stable or upward-trending income, that’s a good sign you're ready.

What’s the True Cost of Your First Employee?

Let’s say you're thinking of hiring someone on £26,000 per year. You might assume that’s your total cost — but the actual figure is closer to £30,000–£32,000, once you include:

• Employer’s National Insurance Contributions (NICs)
  Currently 13.8% on earnings above £9,100/year
• Employer pension contributions
  Minimum 3% under auto-enrolment (but many choose to offer more)
• Holiday pay, sick pay, and bank holidays
  Statutory entitlement is 28 days including bank holidays (pro-rata for part-time)
• Payroll setup and software costs
  Even small businesses need compliant payroll systems and reporting
• HR support and employment contracts
  Often overlooked, but essential to staying compliant
• Equipment, onboarding, and software
  Laptop, email setup, onboarding time, system access, etc.
  

At Curve, we help clients build a forecast that includes not just salary but the whole picture. That way, you know exactly what you're committing to.

Not Quite Ready? Consider These Alternatives First

Before you dive headfirst into becoming an employer, explore these options:

1. Freelancers or Virtual Assistants

Ideal for ad hoc work, project-based support, or testing out a new role without the commitment.

Pros: Flexibility, no PAYE admin, easier to stop/start
Cons: Less control, higher hourly cost, limited availability

2. Part-time or fixed-term contracts

Great for easing into employment without committing to a full-time wage from day one.

Pros: Affordable, easier transition
Cons: May limit the scope of what they can do or own

3. Outsourcing to agencies

Admin, bookkeeping, marketing, or sales can often be outsourced to specialists until you’re ready to bring them in-house.

Pros: Expert support, low training burden
Cons: Not embedded in your culture, less flexible to change direction

What to Organise Before You Hire

Bringing someone into your business legally and financially means ticking a few boxes. Here’s what you need in place before you advertise the role:

Register as an Employer with HMRC

Even for one employee. You'll need to operate PAYE, submit RTI returns, and deduct tax and NICs correctly.

Set up Payroll

Use HMRC-recognised payroll software or work with an accountant like Curve to manage it for you.

Create a Legally Compliant Contract

This should include:

• Salary and benefits
• Working hours and place of work
• Holiday and sick pay entitlement
• Notice periods
• Probation clause
  

Enrol in a Workplace Pension Scheme

You must auto-enrol eligible employees and contribute to their pension even if they opt out.

Get Employers’ Liability Insurance

This is a legal requirement from day one and must cover you for at least £5 million.

How to Keep Things Tax-Efficient

Hiring someone affects your tax position. Here’s how to stay smart:

Claim Employment Costs as Business Expenses

Wages, NICs, pension contributions, training and equipment are all allowable against your Corporation Tax bill.

Use the Employment Allowance (if eligible)

This reduces your employer NICs bill by up to £5,000/year but not all companies qualify. We'll help you check.

Stay on Top of PAYE and RTI

Missing deadlines or misreporting can lead to penalties. If you’re not confident, it’s worth using an accountant or payroll bureau.

Curve offers full payroll setup and management so you don’t need to worry about the paperwork.

Don’t Just Hire for Today, Hire for the Business You Want to Build

Many business owners fall into the trap of hiring a “jack of all trades” to relieve the pressure without thinking long-term.

Instead, ask:

• What role will free me up to focus on growth?
• What work can only I do and what can someone else do 80% as well?
• Will this person generate revenue, save time, or improve delivery?
  

Hiring should be a strategic investment, not just a reaction to being busy.

Final Thoughts

Hiring your first employee is a big leap but it’s also one of the most rewarding moments in business ownership. Get it right, and it can unlock growth, reduce stress, and allow you to step into a more visionary role in your company.

At Curve Accountancy, we help business owners across Crawley and the South East plan their hires smartly.