Woman working on white laptop on sofa | How to register as an employer

Contents

  1. 1. How to register as an employer
  2. 2. When do I need to register as an employer?
  3. 3. How to register as an employer as a sole trader
  4. 4. How to register as an employer as a limited company director
  5. 5. What happens once you’ve registered?

How to register as an employer

March 22, 2022
This article was updated 22nd March 2023.Whether you simply need an extra hand or are ready to start growing your small business, hiring your first employee is an exciting step for any business owner.However, before you welcome your newest team member aboard, you’ll want to make sure you have the right measures in place to stay out of trouble with HM Revenue and Customs (HMRC) — starting with making sure that you register as a new employer as soon as you’re able to.In this guide, we’ll be going through everything you need to know about registering as a new employer, from when you need to register to exactly how to register as an employer.

How to register as an employer

Whether you’re running a sole trader business or a limited company, you’ll need to register as an employer with HMRC when you start employing staff or start hiring subcontractors for construction work.

However, the structure of your company can determine when your business, in the eyes of HMRC, takes on its first registered employer. Since a limited company is a separate legal entity from its directors, the first employees of that company are the directors running the show. As a result, as soon as the limited company is registered, the directors need to put themselves on a payroll.

Sole traders, while self-employed, are not classified as employees since they and their business are a singular legal entity. As a result, sole traders don’t have to register as a new employer until they make their first hire.

When do I need to register as an employer?

As mentioned above, you’ll need to register as an employer and sign up to PAYE (Pay As You Earn) as soon as your business takes on its first employee. You’ll need to be registered as an employer before your company’s first payday, allowing at least 5 working days for HMRC to send you your employer PAYE reference number.

While it’s good to plan ahead, keep in mind that you cannot register as an employer more than 2 months before you start paying your people.There are, however, some conditions where even if you are hiring an employee you won’t need to register as a new employer. You’ll only need to register as an employer if you employees fall under any of the following criteria:
    Earn more than £120 weekGet a pension or are working another job whilst working for youStart getting expenses or benefits
With this in mind, if none of the above apply to your employees, you can postpone registering as an employer until your employees’ circumstances change. Just keep in mind that you’ll still need to keep records of what you pay them.

What happens if I don’t register as an employer?

Failure to register as an employer has some pretty bleak consequences, so we recommend getting yourself registered as soon as you can. If your company delays or fails to register employees before your first payday, you can be fined £100 per month if your business has between 1 to 9 employees.
Failure to pay the Income Tax and National Insurance contributions (NICs) owed by your employees can land you in even more trouble with HMRC, and can even lead to imprisonment and other severe penalties.

How to register as an employer as a sole trader

If you’re a sole trader registering as an employer for the first time, your method of registration depends on whether you already have a Government Gateway account or not.

If you have an existing online account

If you already have an online account, you can register as an employer by logging into your HMRC account and enrolling for PAYE Online.

If you do not have an existing online account

If you do not have an existing account with HMRC, you can register as an employer when you create an account with HMRC’s online services.
Alternatively, you can register as an employer by filling out HMRC’s sole trader employer registration form. To do so, you’ll need to have the following information close to hand:

    Sole trader name and trading name (if applicable) Unique Taxpayer Reference (UTR) number National Insurance (NI) number Official business address (this cannot be a PO box) Official business phone number Nature of business Number of employees expected to be employed in the current tax year Whether any payments have already been made to employees If expenses and benefits are intended to be paid to employees If the sole trader will be a troncmaster (someone who hands out tips) If an Occupational Pension Scheme will be operated

How to register as an employer as a limited company director

In the majority of cases, limited companies with 1 to 9 directors can register for PAYE online if the company does, or intends to do, one of the following:
    Pay any employees (including directors) £120 of more a weekEmploy anyone (including directors) who is already receiving a pension or has another jobProvide expenses or benefits to employeesHire subcontractors to work in the construction industry
If the company doesn’t plan on doing any of the above until the following tax year, you can register for PAYE online but your application will not be processed until 6th April.
At least one company director will need a National Insurance number to register online. As with sole traders, you’ll also need to have a Government Gateway account set up.

If none of the limited company directors have a National Insurance number, you’ll need to register as an employer either by post or over the phone. From there, you’ll need to provide the following information:

When you can’t register as an employer online

While the majority of business owners can register online, there are a few specific situations where this isn’t an option:
    If your company is an insurance company, or other business responsible for paying sick pay to the employees of more than one employerIf your company is an offshore employer outside the European Economic Area (EEA) or Isle of Man that doesn’t pay UK National InsuranceIf you are planing to provide non-cash incentive awards to employees within 2 months of registering as an employer, such as vouchers (including ones that can be exchanged for cash), any goods, prizes for employer-run competitions and holidays that the company’s paid for (but don’t include statutory holiday pay)
If you fall under any of these categories, you’ll need to get in touch with HMRC by calling 0300 200 3211 or by post.

What happens once you’ve registered?

Once you’ve submitted your application to register as an employer, you’ll receive a letter within 5 working days containing your PAYE and Accounts Office references, which you’ll need to pay your PAYE tax and National Insurance to HMRC.

You’ll also receive an activation code for PAYE Online within 10 working days through the post.With the information above, you can set up your payroll and send information about your employees to HMRC.
What happens after you’ve registered as an employer is down to you. You could manually run payroll at the end of every month — or, with Ember’s automated payroll software that allows you to send Real Time Information (RTI) over to HMRC in a couple of clicks, you could let us take the pain out of payday for you.

Rachel Cameron-Potter
Rachel Cameron-PotterContent Marketer

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