Domestic cleaning business - how to take on staff

[Greg_Thomson]

Hi, I hope someone can help answer a few questions for me. My partner runs a domestic cleaning business which I help with. It has been up and running for a couple of years however we have been at full capicity for some time now and here lies the problem.

We have been turning away a reasonable amount of customers and its frustrating. I have never hired anyone before so this is a bit of a minefeld and my concern is that as there are small margins involved I wouldnt want to be taking on a problem which doesnt make any money - this is a business after all.

So could someone help guide us as to the best way to take on staff. From my very limited understanding the choices we have are:

1/ Employ staff members. The problem with this is that is we say charge £12 per hour and pay the staff say £7 per hour this gives a initial profit of £5 per hour. When we then include insurance, crb check, cleaning equipment and products etc this will leave approx £3 per hour profit. Now surely if we have staff on PAYE and have issues with time off sick, holiday pay, maternity pay, redundancy entitlement, extra accountants costs etc surely that just doesnt make it worthwhile.

2/ What would be easier is if we can take them on on a self employed basis. This would solve a lot of the problems and would put less of the risk on us. The problem with this is that surely as we would be telling the cleaners where to work and providing them with the tools would HMRC not see them as employed rather than self employed.

There has got to be a simple solution to this as there are thousands of cleaning companies out there that charge these kind or rates and I assume still make money from it but I cant seem to find how they arrange their staff. Where there are so many people out of work it would be nice to be able to provide some work and also build my partners busienss at the same time.

Any help or guidance will be much apprecietd,

Thanks
Greg

 

[Richie N]

It would be easier for most employers if they take staff on a self-employed basis, just because it would be better for your business doesn't make it right.
You need to speak to an accountant about this.

 

[VictorVector]

It would be easier for most employers if they take staff on a self-employed basis, just because it would be better for your business doesn't make it right.
You need to speak to an accountant about this.

Yeah but the point he makes is valid and is what is strangling the small business community in this country.

What is the point of expanding a business to the extent where you need to employ staff when all you are doing is entering a minefield of legislation, regulation and the possibility of litigation if you screw up and employ the wrong people.

Is it worth it? No it ain't, which is why many people like myself are disappearing up their own rear ends trying to devise small business ideas that will not require the employment of staff.

What a world eh!

 

[Talay]

Also caught with this conundrum, I came to the conclusion that either you sell your service as professional, honest, caring, social responsible etc. or you push the business risk onto the "employee" and force them to work as self employed, wondering whether HMRC ever come to check because there is not way they are truly self employed.

I chose to sell the service, invest in and train staff and sell that as part of the overall package. I also considered screwing over anyone I could find who got in my way and who was operating illegally or outside the spirit of the law and rain down the wrath of HMRC on them from a very great height.

I still ponder whether those two ideals are mutually exclusive ?

 

[BustersDogs]

I started charging more once I took on staff - clients now never have an interruption to their service with holidays, sickness (although I never took time off sick anyway) etc, so they need to pay for the fact they are not using a one man band anymore. It is hard to put prices up for current clients, so I gave them all 3 months notice, told them all about the improved service they have etc.

I've had a much improved turnover this year with people working for me, although because I bought two vehicles for the business in the last tax year I seem to have only made the same profit I made last year when I was a one mad band! I am kind of thinking I need another 3 years to start showing a profit, but in the meantime my business name is the one everyone knows.

My first empployee was self-employed (she was only with me 3 months), thenI looked into it and my second was employed, bbut he was casual, so only worked as and when I needed him. His hours grew slowly, so when he went to uni I had more of an idea what hours I would need someone, and now I have two permanent staff on a fixed weekly wage, but another 3 casuals still - students! My job gets busier in school holidays, which is when the students want to come out to play, so it suits all of us. When I first stated none earned over £101 a week, so no tax and NI to pay, but in April this year I was able to offer more hours to my permanent staff. It's a case of take it slowly! It took me two years to get to this point with my staff. You can do it!

 

[Matt G]

If i got it right you charge 12pounds per hour, which is probably the medium cost per hour. What you can do, is raise up the costs of your services, let's say to 14-15 pounds and this way you will be able to hire 1-3 people, and support the salary from the new upgrade.

Or, you could keep your existent clients, and work just with an fix number of clients, but as we all know, when we see the business grows, we need to work more and more, and its obvious that provit is growing...its all about "turnover"..

Hope you will do the right choise..

Regards,
Matt

 

[Richie N]

Yeah but the point he makes is valid and is what is strangling the small business community in this country.

What is the point of expanding a business to the extent where you need to employ staff when all you are doing is entering a minefield of legislation, regulation and the possibility of litigation if you screw up and employ the wrong people.

Is it worth it? No it ain't, which is why many people like myself are disappearing up their own rear ends trying to devise small business ideas that will not require the employment of staff.

What a world eh!

We all have costs in our business, staff usually being the biggest.
You just have to factor these costs into your charges to customers, so if he needs to take on staff then he needs to increase his rates.
Just take on casual staff on zero hours contracts.

All these threads about taking on self employed people is just a way to avoid paying tax and national insurance on them, which unfortunately can't be avoided.