There are a number of important steps you must take when employing new staff, to make sure they are working for you legally, and that you are paying the correct wages, tax and National Insurance contributions (NICs). If this is your first employee, you will also need to register as an employer with HM Revenue & Customs (HMRC).

What is an employee?

There are two types of employment status, employed and self employed. This will depend on the type of contract agreed, which can either be:

• a contract of service, which means employees are working for you either permanently or part time in a fully employed capacity, and you are responsible for their tax and NICS contributions.
• a contract for services, which means employees are providing you with specific services when you require them, but are paying their own tax and NICS contributions.

You can find out more about employment status by visiting www.hmrc.gov.uk and reading guide number ES/FS2.

Legal Workers

When you are taking on employees you must ensure they are can legally work in the UK . You can do this by checking that they have at least two of the required identity documents (such as a passport, drivers license, birth certificate etc). This is an important check, as employing illegal workers can result in a large civil fine of up to £10,000 per worker, and you can visit the UK Border Control website (www.ukba.homeoffice.gov.uk) for further information.

Paperwork

Your employee may have recently left a job, and so will be able to provide you with the necessary P45 tax form from their previous employer. However if they do not have this form then you will need to fill in a P46 for them. Always check P45’s carefully to ensure the details are correct, as this form helps you to calculate the correct tax for each of your employees. If you need help with this you can phone the HMRC New Employer Helpline on Tel 0845 60 70 143.

Register for PAYE (Pay as You Earn)

You can set up a payroll record even if you only have one employee, and this will help you to calculate and record all tax and NIC contributions, and any other deductions from your employee’s earnings correctly. You can get a helpful starter pack regarding PAYE issues from the HMRC by calling the New Employer Helpline number listed above, or by visiting the website www.hmrc.gov.uk.

Once you start trading it is important to keep all of your correspondence (not just invoices) so that you have an accurate and through record of all your business transactions. You never know when you might need refer back to a previous client’s contact details, or to follow up on a query you originally dealt with months ago. Here is a top ten of the best tips to help you sort out your filing:

1) Location – make sure you have a separate, secure space for your filing, so that you don’t have to move things around before you can get to it. Try and locate your filing in a handy spot for where you do most of your office work, so that you can file and retrieve things away quickly and easily.

2) Storage – Keep things simple for storage containers. If you use your files on a daily basis then box files kept in open cabinets or on shelves are easy to use, and can be moved around and stored away again quickly. If you have a lot of paper work, or need to file things away for long periods then filing drawers are ideal and also have the benefit of being lockable so that you can keep stored data secure.

3) Alphabetical or Numerical order – If your business involves a lot of client contacts then the most logical filing system is alphabetical order, under the client’s last name or company name. This also makes it easier for new people coming in, as then they don’t have to learn a complicated system and can get to work straight away. If you generate a lot of invoices or give each job a reference number then it makes sense to file paperwork in numerical order.

4) Labelling – make sure you label each file clearly, both on the front and the spine, so that you can find what you need quickly and easily. If your handwriting is a bit messy then it is a good idea to buy printing labels and use the computer to print out clear, durable labels.

5) File Folders – box files are ideal for keeping invoices and individual sheets of paper tidy, and are useful if you have large client files that need to be added to over time. Coloured folders are also a good idea, as they can be used to separate areas of your business such as marketing, client information and financial documents. This can make it easier to find things when you are in a hurry.

6) In trays and out trays – many business owners find in/out trays very handy for sorting and storing current work and enquiries, which can then be filed in the main system once they have been processed.

7) Email – don’t forget that your emails can be stored in a filing system too, by creating folders in your inbox, or on your main computer hard drive. Keep it simple, and if you have a full inbox and want to delete things then you could always print them off and file then in your hardcopy system if you think you may need them again.

Record Maintenance – most businesses review hard copy records on a yearly basis, so that they don’t end collecting hundreds of out of date or obsolete files. Financial and tax records are usually kept for 10 years, whereas enquires and items like sales brochures are only kept for 1 to 2 years.

9) Employee Records – It is a good idea to keep employee records in a separate, secure place from your other filing, as much of this information is normally private, and your employees would not want other unauthorised colleagues to have access to this.

10) Indexes – if you have a large number of files, then you might want to consider creating an index. It may take a little time to set up, but it can save you hours of wasted time in the future, and will help others who may need to use your files.

Hope this will help to manage your files efficiently. Comments and suggestions appreciated.

Running your business from home can save you a lot of time and money, as you will not have to look for and set up additional work premises, or pay additional rents and rates. Here are 5 top tips to help you set up your own business from home:

1. Business Area – Create a separate area in your home to run your business from. Ideally you should have a separate room dedicated to your home business, a place where you can store all of your paperwork and answer queries. If possible set up a separate phone line, so that you can keep your business and personal calls separate.

2. Costs – if you need to spend money on setting up your business from home keep the costs separate from your other home expenses. Set up a dedicated business account so that you can keep your profits and outgoings organised, and if you can, arrange to pay yourself a set wage every month to a private account, so that you don’t have to keep dipping into the business account for your own personal costs.

3. Lifestyle – working from home can give you freedom, but it can also become a burden if you do not make a concerted effort to keep your business and personal lives separate. Set strict office hours, and only do business work in this time (avoid housework or watching television) and finish on time, turning the business phone to an answer machine and shutting the business room door to help you switch off at night. If you find you are working all hours just to make some money, try seeking some professional business advice to see how you could improve things and give yourself a break.

4. Rates – even if you run your business from home you may be liable to pay business rates, so contact your local council (www.direct.gov.uk) and ask for further advice. It is important to sort this out at the start, as if you are liable and the council find out about it they could take the charges back to the date you set up your business, which could leave you will a huge bill to pay.

5. Insurance – if you are running a business from home and have one or more employees working on your property (or customers visiting the premises), then you will need to arrange some different insurance to ensure you are protected against any accidents or incidents. You can find out more about different types of home business insurance at wikipedia too.

When you are running a business it is important to have the right IT solutions in place, as this can drastically improve the efficiently of your overall management, from payroll through to booking daily appointments. Here are a few tips to help you choose the right IT to suit your business:

• Profession IT Support – very few people are experts at using and maintaining computers so it can save a lot of time and worry if you have an account with a professional IT support company, who can help you through tricky computer or networking problems, and send a technician out in the event of hardware failure.

• Organisational software – Most basic operating systems have contacts, task alerts and calendars, which can help you organise your day more efficiently. You can also buy shared software which can be accessed by mobile devices such as laptops, mobiles and palm tops, so that you and your employees can see what everyone else is doing, and make new appointments.

• Offsite Back up – if you use computers a lot in your business it is essential that you have all your important records saved in an offsite storage facility, so that in the event your computers are damaged, stolen or malfunction you can still access the information you need to keep working.

• Digital cameras – if you need to take photos as part of your work then make sure you provide your staff with digital cameras, as these can save a lot of time and money. You simply download your photos each day on to a computer and delete the ones you do not need, which avoids the time and cost of getting the film developed.

• PDF – if you want to send quotes, invoices or brochures by email use file compressing software such as PDF, which saves storage space and prevents your and your clients email capacity from being unnecessarily wasted.

• Networking – if you have several employees that all need to access the same computer files and documents then it makes sense to set up a networking system, such as NAS (Network Attached Storage), which is cost effective and easy maintain.

As identity theft is one of the fastest growing crimes in the world, it is important that you take care to protect all of the data held by your business, including that of your employees and your clients. There is a legal requirement for data protection in the UK that you will need to comply with, which applies to:

…data about living, identified or identifiable individuals and includes information such as names and addresses, bank details, and opinions expressed about an individual.

Data Protection Act 1998

The Data Protection Act will also guide you on issues such as when it is acceptable to provide any personal data that is requested from you, and the rights of individuals whose data you hold.

Marketing

The use of personal data in direct marketing strategies is essential, but there are rules that govern how you can go about this. The Privacy and Electronic Communications Regulations 2003 set out rules on how direct electronic marketing (telephone or email) can be carried out. The main compliances marketing departments need to adhere to are that agents must identity themselves when they are contacting individuals or organisations, and provide contact information so that the recipient can return the communication, which should be a postal or email address, or a toll free telephone number.

Ecommerce

If you are running a website based business and want customers to be able to pay or provide sensitive personal information online, then you must ensure you have adequate website security in place, such as up to date encryption software. You will also need to ensure that records of payments and transactions are kept in a secure physical location, such as a locked and alarmed storage or office space.

Employee Records

Make sure you store your employee records separately from your main filing, and restrict access to authorised personal only. Keep these records locked and secure, and avoid leaving sensitive files out on your desk when you are not in the room. If you have to send any important employee data through the post (such as sick records or notification of termination of employment) then use recorded postal services to ensure that it is delivered directly to the correct person.

Hope that helps to secure and take steps to protect your business data.