July 9th, 2015

6 Things to remember as a sole trader employing a family member

Do you realise that as a sole trader you can employ a family member?

There are some key things to remember if you decide to do this:

  1. You must make sure that your rates of pay are commensurate with the duties being performed – take a look at hourly market rates for similar jobs if you went via an agency. ┬áThere is a good argument to pay a higher rate than the market to reflect things like :
    • duties being performed during unsociable hours
    • a high level of trust may be required and a family member can be relied upon to work diligently
    • work can be discussed outside normal hours, providing greater flexibility
  2. Ensure tax and NICs are paid unless the family member is self-employed
  3. If family member is self-employed then invoices must be raised and it is best to tag them to specific/defined projects with an agreed rate
  4. Invoices must be physically paid and it’s best not to use a joint account
  5. Remember that the recipient will be liable to tax and responsible for ensuring that they sort this out themselves
  6. Be aware of following working time regulations for young people, you can employ a young person if they are over 13

If you would like to discuss this in any more detail, please do not hesitate to contact us.

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Alison obtained a First class degree in Accountancy and Management at UCLAN University. She then went on to qualify as a certified accountant in 2006 and became a founder member in 2011.

Alison trained at a practice in Liverpool and, within her 10 years there, she developed as an accounts manager and obtained a varied portfolio of clients which has provided her with a range of experience in accounts, audit, VAT and taxation.
Alison specialises in giving sound jargon-free advice to a range of small and medium sized businesses.

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