As your garden centre or local shop begins to grow, you may reach the exciting milestone of hiring your first employee. While bringing someone on board can boost productivity and free up your time, it also introduces a range of tax, payroll, and legal responsibilities.

If you’re a small business owner in a rural area or running a busy garden centre, getting your payroll and tax setup right from the start is essential to avoid fines, save time, and stay compliant. In this blog, we break down the key steps and considerations when hiring help for the first time.

When is it time to hire someone?

Many owners of garden centres, farm shops, and rural retailers start solo or with family support. But when customer footfall increases, seasonal demand rises, or admin tasks pile up, hiring becomes necessary. Before you do, make sure your business can financially support wages, insurance, and employer taxes.

Step 1: Register as an employer with HMRC

Within 28 days of your first employee pay date, you need to register as an employer with HMRC. Registration is done online, and HMRC will provide you with a PAYE (Pay As You Earn) reference number, which is used for all payroll-related activities.

Step 2: Set up a payroll system

You’ll need to run payroll through payroll software to:

• Calculate tax and National Insurance (NI)
• Issue payslips
• Submit Real Time Information (RTI) to HMRC every time you pay employees
• Keep records for at least 3 years

Step 3: Understand employee tax and National Insurance

When hiring staff, you’ll be responsible for:

• Income Tax: Deducted based on your employee’s tax code.
• Employee National Insurance: Deducted from employee wages above a certain threshold.
• Employer National Insurance: Paid by you on wages over a certain threshold.
• Workplace Pension Contributions: You must auto-enrol eligible employees into a pension scheme and contribute a minimum amount.

Getting these figures right is crucial as any errors in deductions or late payments can lead to penalties.

Step 4: Factor in the true cost of employment

Wages are just part of the cost. You’ll also need to account for:

• Employer’s NI contributions
• Employers pension contributions
• Holiday pay
• Sick pay
• Employer’s liability insurance
• Payroll software or accountant support

Budgeting properly helps you avoid cash flow problems, especially in seasonal businesses like garden centres.

Step 5: Provide a legal employment contract

All employees are entitled to a written statement of employment from day one. This should include:

• Job role and responsibilities
• Pay rate and schedule
• Working hours
• Holiday entitlement
• Notice period

Accountant’s Tip: Keep records and stay compliant

From the first hire, good record-keeping is vital. You should retain details such as:

• Payslips and payroll reports
• Employee contact and tax information
• Pension contribution records
• Contracts and performance reviews

Having these records up to date makes it easier to manage audits, staff changes, or tax inspections.

Hiring your first employee is a big step, but with the right preparation and professional support, it doesn’t need to be stressful. Whether you’re running a rural garden centre, a gift shop, or a farm shop, understanding your payroll, tax, and legal duties is the foundation of building a reliable and productive team.