Can a Sole Trader Have Employees?

Ryan Scott • 9 June 2025

Why going solo doesn’t mean going it alone

Expert Insights from SBX Accountants

When people hear the term sole trader, they often assume it means working alone. It’s a fair assumption - sole sounds like “just one person.” But in business, sole refers to ownership, not the number of people involved in the day-to-day work.

At SBX Accountants, we support hundreds of sole traders across the UK, and one question we hear regularly is:


 “Can a sole trader employ staff?”



The answer? Yes - absolutely. And in fact, many do.

What Is a Sole Trader?

A sole trader is a self-employed individual who owns and runs their business as an unincorporated entity. There’s no legal separation between the person and the business, which means you're personally responsible for its debts and liabilities.

Sole trader status is popular due to its simplicity. There’s no need to file annual company accounts or pay corporation tax. Instead, you declare profits through a Self Assessment tax return and pay Income Tax and National Insurance accordingly.


Can a Sole Trader Employ Staff?

Yes - being a sole trader doesn’t mean working solo forever. It just means you’re the sole owner of the business.

As your business grows, it may become necessary (and a great sign of success) to bring in help. Hiring staff can allow you to:

  • Increase capacity and take on more work
  • Free up your time for higher-value tasks
  • Bring in new skills or services
  • Continue growing without compromising quality

Hiring employees is a significant step - and it comes with added responsibilities. That’s where we can support you every step of the way.


Your Responsibilities as an Employer

When you take on staff, you’ll need to meet the same legal obligations as any UK employer. Here’s what that involves:


1. Register with HMRC

Before your first payday, register as an employer with HMRC to set up PAYE (Pay As You Earn).


2. Provide a Written Employment Contract

Employees must receive a written statement outlining key terms - pay, hours, holiday, and notice - by their first day.


3. Pay the Legal Minimum

You must pay at least the National Minimum Wage or National Living Wage (depending on the employee’s age). Rates update each April.


4. Operate Payroll and Submit Reports

You’ll need to:

  • Deduct tax and National Insurance from employee pay
  • Submit payroll data to HMRC (Full Payment Submissions)
  • Pay amounts due by the 22nd of each month (if paying electronically)

Our SBX packages include payroll processing for up to two employees - so you can leave this to us.


5. Provide Statutory Employment Rights

Your employees are entitled to:

  • Paid annual leave (at least 28 days incl. bank holidays)
  • Sick pay (SSP)
  • Maternity and paternity leave
  • Protection under the Working Time Regulations


6. Set Up a Workplace Pension (if required)

If an employee is aged 22+ and earns over £10,000/year, you’ll need to auto-enrol them in a pension scheme.

  • You contribute a minimum of 3%
  • The employee contributes 5%


7. Ensure Compliance

You’ll need to:

  • Check your employee has the legal right to work in the UK
  • Follow the Equality Act 2010
  • Provide a safe working environment
  • Keep accurate records (payroll, hours, pension contributions)

You’ll also need employers’ liability insurance, which is a legal requirement and protects you in the event of a workplace claim.


Why Work With SBX Accountants?

Growing your sole trader business is exciting - but also challenging. At SBX, we specialise in helping sole traders expand with confidence, offering:

  • A dedicated accountant who knows your business
  • Unlimited advice with same-day replies
  • Payroll for up to 2 employees, included as standard
  • Full QuickBooks setup and support for simple, MTD-ready bookkeeping
  • Year-end accounts and Self Assessment filing handled for you

As the landscape changes with Making Tax Digital for Income Tax (starting April 2026), having the right support is more important than ever.


Ready to Take the Next Step?

If you’re considering hiring your first employee - or just want reassurance that your business is on the right track - get in touch.

Request a free callback today to speak with one of our sole trader specialists.
Let’s grow your business the right way - together.

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