Hiring your first employee is a huge milestone and an exciting sign that your business is growing. But it also brings legal obligations, practical challenges, and a fair bit of paperwork.

Get it right, and you’ll set the tone for a successful team. Get it wrong, and you could face unnecessary risks or costs.

Here’s a step-by-step guide to help you through the process, with expert HR advice along the way.

1. Define the Role

Think carefully about the tasks you need help with. What’s taking up too much of your time? What gaps are you trying to fill?

Top Tip: Focus on the work that will free up your time to grow the business not just what you don’t enjoy doing.

2. Set a Realistic Budget

Beyond salary, don’t forget to factor in:

1. Training, tools or equipment
2. National insurance contributions
3. Pension contributions (if eligible)
4. Holiday and statutory pay

3. Register as an Employer

You’ll need to register with HMRC before paying your employee. It’s a simple process, but crucial.

4. Get a Legally Compliant Employment Contract

You are legally required to give a new employee a written statement of terms (contract) on or before their first day.

Your contract should cover:

1. Job title and duties,
2. Salary and hours,
3. Holiday and sick pay,
4. Notice period, and
5. Company policies to name a few!

This is where many small businesses go wrong. Don’t be tempted to copy something off Google. Your contract should reflect your specific business and be legally up to date.

ACAS highlights that clear, well-drafted contracts are essential for setting expectations and avoiding disputes.

5. Put Basic HR Policies in Place

Even with just one employee, it’s a good idea to have:

1. A staff handbook
2. Health & safety basics
3. GDPR-compliant employee privacy notice
4. An onboarding checklist

6. Advertise the Role and Interview

Free platforms like Indeed and social media can help spread the word. When interviewing, be consistent, ask the same core questions and keep notes.

7. Make the Offer & Do Your Checks

Once you’ve found the right person:

1. Send a formal offer letter
2. Carry out right to work checks
3. Get references
4. Agree on a start date

8. Set Up Payroll & Pensions

You’ll need to process pay correctly and assess whether your new hire qualifies for a workplace pension. Consider using payroll software or a provider to make this easier.

9. Onboard Them Properly

A positive first week makes a huge difference. Give them time to settle in, introduce your systems, and talk through expectations. First impressions count.

You Don’t Have to Do It Alone

Getting everything right when hiring your first employee can feel overwhelming — but it doesn’t have to be.

At Harrogate HR, I help small businesses like yours get set up for success with:

1. Employment contracts tailored to your business
2. Simple, compliant staff handbooks
3. Onboarding support
4. Ongoing advice when you need it