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Can a Sole Proprietor Hire Employees?

The word "sole trader" does not refer to working alone; rather, it refers to establishing a firm under your own name. As a result, a solo proprietor can be an employer.

By cheap accountantPublished 6 months ago 3 min read

Is it necessary to form a limited company in order to hire people?

You can hire people as a solo proprietor. It is not required to incorporate a limited corporation only for this purpose. Although sole proprietors operate their businesses on their own, this does not exclude them from employing others. The word "sole trader" does not refer to working alone; rather, it refers to establishing a firm under your own name. As a result, a solo proprietor can be an employer.

But how can a sole trader become an employer? Let us investigate!

How Do I Register As An Employer As A Sole Proprietor?

A single trader, like a limited company, must register with HMRC as an employer. First, the single entrepreneur must register for PAYE (Pay As You Earn) before paying the first salary to the employees, but not more than two months before the first payment.

A solo trader can register for PAYE by connecting into their Government Gate Online Account and completing this online form. The following information must be provided when registering:

  • Sole proprietorship and business name (if applicable)
  • Your company's nature
  • Number of National Insurance (NIN)
  • Taxpayer identification number (UTR)
  • Official company phone number and address
  • If the lone proprietor is a Troncmaster,
  • If an Occupational Pension Scheme is used,
  • Personnel are expected to be hired during the current fiscal year.
  • Employee wages that have already been paid

Expenses and benefits that will be provided to employees

HMRC will issue PAYE and Accounts Office reference numbers to you (single trader) within five working days of you registering as an employer. These reference numbers are required in order to enrol in PAYE online. Let's look at how PAYE is used online.

PAYE Online HMRC's PAYE Online is used for:

the outstanding amount to be paid to HMRC, sending payroll reports to HMRC, appealing any penalty, receiving letters and tax codes concerning one's employees, receiving HMRC alerts about late payments, and so on.

To submit reports to HMRC, the lone trader (as an employer) must use PAYE online login details in payroll. However, the PAYE online service cannot be used to send payroll reports other than benefits and expense returns via a P11D form.

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How Do I Process Salary Payments Without Using PAYE?

You must do the following before you may make wage payments and obtain an Employer PAYE reference number:

Run the payroll store and send the required Full Payment Submission (FPS) to HMRC.

Sole Trader Employment Law in the United Kingdom

If you wish to engage employees as a sole proprietor, you must understand and adhere to UK employment rules. These are some examples:

  • Paying the national minimum wage or higher
  • Statutory maternity, paternity, and adaptation leave pay
  • Protecting employees against prejudice
  • Providing rest breaks and paid vacation

When employing staff for your single proprietorship, you must understand your responsibilities as an employer and put them into action in your firm.

To summarise

You now know the answer to the question 'can a single trader have workers' after reading this blog. Employees can be hired by sole proprietors in the same manner that a limited firm can. In addition, they must register as employers with HMRC. Furthermore, they must run payroll and enrol in the PAYE service in order to pay employees. They must also follow employment rules and regulations.

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