Do I need Insurance for my Small Business?

You are legally required to take out Employer’s Liability (EL) insurance if you employee anyone, even on a casual basis. This is the only insurance that is illegal required to operate your business with in the UK. Some contractors will request you have EL insurance, ensure this is clarified in the contract between you before starting to work with them. If you have employees and operate without EL insurance you could receive a fine of up to £2,500 per day.

What is Employer’s Liability insurance? 

This is to cover you and the business if an employee becomes injured or dies whilst carrying out their duties at work.

How much does Employer’s Liability insurance cost? 

Your premiums will depend on the type of business and how many employees you have. For example, an office worker could be as low as £60 per annum whereas an employee working in construction could be just over £200. The average to cost to a small or medium sized business in the UK is about £120 per year.

Will my Employer’s Liability insurance pay out? 

You should read the whole contract through first and if you are unsure about anything ask the service provider or have a lawyer look over it. The main sections to focus on are ‘Insuring Clauses’ and ‘Exclusions’, this can help you clarify what is covered and therefore more likely to result in a pay-out.

Other types of insurance include… 

How much does it cost to add business use to my car insurance? 

If you are going to be using your own vehicle to carry out business activities you may want to add business use to ensure you’re fully covered. Premiums usually only go up by about £30.

What is Professional Indemnity insurance? 

This covers you if a client incurs a financial loss from your actions. This could include if you made a mistake or accidentally omitted something during your dealings with the company. The burden of proof lies with them but if a client does decide to take action against you, a case could be costly and time consuming, not to mention stressful. This insurance applies to many different types of businesses from consultant firms to graphic designers so even if at first you think this might not apply to you, it would be worth getting quotes.

Should I get Professional Indemnity insurance? 

This insurance is not a legal requirement in the UK but we would recommend considering taking out a policy if you feel this situation may occur in your line of work.

What is Public Liability insurance? 

Public Liability insurance covers you against customers and members of the public making claims if they become injured whilst at your business or as a result of your or your employees’ actions whilst carrying out their duties.

Should I get Public Liability insurance? 

If you regularly come in to contact with the public, we would advise considering this type of insurance.

How much does Public Liability insurance cost? 

The average cost of Public Liability for a UK company is about £120 per year however small businesses and sole traders can pay as little as £40 per annum.
There are many different types of insurance out there and we have only covered the three main ones for general business. If you work in a niche industry or with a specialised product/machinery having tailored insurance would be advisable. Always get several quotes to compare, carefully read your policies to ensure you are covered correctly and if in doubt ask a lawyer to look the contract over.

Employment Essentials for Small Business Owners

EMPLOYMENT FOR SMALL BUSINESS WHAT YOU NEED TO KNOW 

This article provides a quick and easy to understand checklist for new businesses on how to employ people and what the law requires of you, but also how to be a good employer.
Employees are the heart of a business & the most valuable asset, especially in a smaller company. Some would even argue your business is your employees. Thus it is important to make sure the impact they have is positive and they are treated well, helping you increase your productivity, while also abiding by the law and employment regulations.

1. Choosing what type of employee you need 

You can choose to employ permanent employees or hire a contractor/freelancer. There are different types of employment agreements such as full-time, part-time, fixed-term, freelance, consultant, and contract, all with their own legal requirements.
Find out more about employment types in this article

2. Successfully recruiting 

A clear job description & seamless recruiting  
Regardless which type you plan to employ, first you need to create a clear job description. This is vital to get relevant applications from people that have the skills and qualifications you require.
Keep a record of each applicant throughout the process, including strengths, weaknesses & other notes. It will help you select the best candidate when the interviews are done. You can do the hiring process yourself or you can hire a recruiter to do it for you.
Avoiding discrimination in the workplace  
Please note it is against the law to discriminate employees based on age, race, sex, marriage, disability, sexual orientation, and religion.

3. Inform HMRC 

When you start hiring, you need to register as an employer with HMRC. It is important to note you cannot pay your staff before doing this and also you cannot register more than 2 months before you employ and start paying staff.

4. Obtain employers liability insurance 

The law requires you to have employers’ liability insurance and it must cover for at least £5 million, coming from an authorised insurer. It is designed to allow for employee compensation if they are injured at work and protects your business if you are taken to court. You also need to display a copy of the employers’ liability insurance certificate in your workplace. The cost of this insurance is based on several factors such as: type of business, number of employees, and previous insurance claims history.

5. Draft the employment contract 

If this is your first contract, it is advisable to seek professional legal advice in order to make sure all is in order. The employment contract needs to be signed by both parties, both you and your future employee.

6. Make sure every employee has a National Insurance Number 

You also have to ensure every employee has a National Insurance Number, as contributions need to be paid and tax payments need to be recorded against their name.

7. Bookkeeping: keep accurate tax records, remember key dates and tasks & set up a payroll system 

Legally, you are required to keep accurate tax records for six years. They need to be safe, secure and easy to access when needed. For this, you can use an accounting software or hire an accountant who can do that for you.
It is also advisable you log in to HM Revenue and Customs’ (HMRC) PAYE Online service to send payroll reports to HMRC, access tax codes and notices about your employees, appeal a penalty if you get one, get alerts from HMRC for late reporting/paying or any mistakes in the monthly reports.
For setting up a payroll system you can either do it yourself or hire an accountant to deal with this and with your tax records. Usually accounting software is used and it is quite a painless process. It helps you stay compliant, pay your employees on time and file reports for HMRC.

8. Understand the rights of your employees & keep a file for each employee 

Keep an up to date record of all your employees, including full name, address, contact details, emergency contact details, tax details, a signed copy of the employment contract, and any other important information about them. They need to be kept for 6 years just like the tax records.
If you are unsure what information you need and are allowed to collect about your employees, contact HMRC.