Hiring Your First Employee as an Accounting Firm | AccountingStack

Step 1: Define the role and budget

Be specific about what you are hiring for. Common first hires for a small UK practice are:

• Bookkeeper or accounts assistant (AAT-qualified or part-qualified) to take over recurring bookkeeping, VAT and accounts prep
• Trainee accountant funded via apprenticeship (Level 4 AAT or Level 7 ACA/ACCA), suitable when you have CPD and supervision capacity
• Office manager or client coordinator if your bottleneck is admin and onboarding rather than technical work

Salary benchmarks (UK 2026, outside London):

• Bookkeeper / accounts assistant: £24,000 to £32,000
• AAT Level 4 / part-qualified accountant: £28,000 to £40,000
• Newly qualified ACA/ACCA: £35,000 to £55,000

London adds 15% to 25%. Apprentice salaries can start lower if eligible for the National Minimum Wage apprentice rate, but most practices pay above this.

Step 2: Calculate the true cost

The headline salary is not the full cost. Add:

• Employer's National Insurance contributions (Class 1 secondary), with the rate set in current tax year
• Pension auto-enrolment contributions (currently 3% employer minimum on qualifying earnings)
• Apprenticeship Levy if total payroll exceeds the threshold (most small practices do not pay)
• Holiday pay and statutory sick pay accruals
• Equipment, software licences, training and CPD
• Recruitment costs (advertising, recruiter fees if used)

Plan on total ongoing employer cost of approximately gross salary + 13% to 18% for a typical first hire, more if you provide enhanced benefits.

Step 3: Register as an employer

Before paying anyone, register as an employer with HMRC. You can do this online via GOV.UK. Allow 5 to 10 working days for HMRC to issue your PAYE reference. You also need an Accounts Office reference for paying PAYE deductions.

Step 4: Set up payroll

Choose payroll software that supports Real Time Information (RTI) submissions to HMRC. Common options for small practices include:

• BrightPay (popular with UK practices for own-staff and client payroll)
• Moneysoft Payroll Manager
• Xero Payroll, QuickBooks Online Payroll, Sage Payroll if you already use the parent platform

Ensure the software handles auto-enrolment pension submissions to your chosen pension provider (NEST is widely used for first hires).

Step 5: Workplace pension

Under auto-enrolment, you must enrol eligible jobholders into a qualifying workplace pension scheme and contribute the statutory minimum. NEST (the National Employment Savings Trust) is a free, government-backed scheme widely used by small employers. Set up before the employee's first payday.

Step 6: Employer's liability insurance

You must hold employers' liability insurance (minimum cover currently £5 million) from the day you employ anyone. Most small business insurance providers offer combined business policies including EL, public liability and contents.

Step 7: Written statement of employment particulars

UK employees and workers must be given a written statement of employment particulars on or before their first day. Cover at least:

• Names of employer and employee, start date, continuous service date
• Pay (amount, frequency, and how calculated)
• Hours of work, including any variable or unsocial hours
• Holiday entitlement (statutory minimum 5.6 weeks for full-time)
• Place of work
• Notice periods (both ways)
• Disciplinary, grievance, and probationary period
• Pension provision and any benefits
• Confidentiality and any restrictive covenants

For a more detailed contract, use a template from ACAS or a small business HR provider (Peninsula, BrightHR, Citation), or a solicitor.

Step 8: Onboard your hire

• Provide a clear induction plan covering software, processes, AML, and any client-facing standards
• Add the new employee to your AML training schedule (annual minimum)
• Define delegation patterns: which clients, which work, when you review
• Schedule weekly 1:1s for the first three months and a formal probation review

Common first-hire mistakes

• Hiring before there is enough recurring work to cover the cost for at least 9 to 12 months
• Underestimating the time needed to train and supervise
• No written contract on day one
• Forgetting to update PII to reflect the new employee
• Skipping AML training for the new hire

Key Takeaways

• Define role and salary against the work pipeline; account for total cost (typically salary + 13% to 18%)
• Register as an employer with HMRC before the first payday; allow 5 to 10 days
• Use compliant payroll software with RTI and auto-enrolment
• Hold employers' liability insurance from day one
• Issue a written statement of employment particulars on or before day one
• Update PII and AML training to cover the new employee
• Apprenticeship routes can be a strong fit for first hires

Frequently asked questions

How much does it cost to employ someone in the UK?
Total employer cost is typically gross salary + 13% to 18%, covering employer NIC, pension and incidentals. Add equipment, software and training on top.

How long does HMRC take to issue a PAYE reference?
Usually 5 to 10 working days after registration. Apply well in advance of your intended first payday.

Do I need a contract from day one?
You must give a written statement of employment particulars on or before the first day of work. A more comprehensive contract should follow shortly after.

Can I avoid auto-enrolment for my first employee?
If the employee meets the eligibility criteria you must auto-enrol them. You cannot opt out as the employer; the employee can opt out themselves after enrolment.

What pension provider should I use?
NEST is widely used for first hires because it accepts all employers, has no employer fees, and integrates with most payroll software.