Hiring staff as a small business owner – things to keep in mind
If your company is growing and you need extra hands for the longer term, hiring staff can be a good solution. Even if you have a sole proprietorship or general partnership, it is possible to hire employees and interns. There are, of course, a few things to consider here. This is what you need to keep in mind.
What are your obligations?
When you are an employer, you suddenly get a lot of responsibilities and obligations. In addition to keeping the salary administration, there are contracts, insurance, pension and working conditions you need to arrange. You have to ensure a safe and healthy working environment for your staff and you’re also obliged to continue paying when an employee is ill. Be aware of all these extra tasks and get all the required information from the experts if you want to be sure about things.
Drafting a contract
Once you’ve found the perfect employee, it’s time to draw up the employment contract. The contract contains the agreements you as an employer make with your staff. The contract includes:
A complete checklist for the employment contract can be found on the website of the national government.
You always agree to a gross salary with your employee. In addition to the gross salary, you also owe employer’s contributions. The amount depends on your industry of work, but take into account about 25 to 30%. Payroll tax is deducted from your employee’s gross salary. The withheld payroll tax, together with the employer’s contributions, is the amount that you pay to the tax authorities.
Register as an employer
Congratulations! You have hired your first employee and now you’re an employer. At least, almost. You’ll first have to officially register as an employer with the tax authorities. You only have to do this once, when you hire someone for the first time. By using the form ‘Melding Loonheffingen Aanmelding Werkgever’ you have to let the tax authorities know that you’re going to hire someone. They will then send you all the information you need to file the payroll tax return.
You’ll receive a payroll tax number from the tax authorities and from that moment on you submit a payroll tax return every month. You then pay the salary to the employee and the payroll tax to the tax authorities.
Work related expenses scheme
You may have heard of the WKR (Werkkostenregeling), or the work-related expenses scheme. As an employer, you are allowed to spend a certain percentage of the taxable wages of all your employees on allowances every year. You do not have to pay wage tax on these reimbursements. The percentage of the WKR (Work Cost Scheme) in 2024 is 1,92% up to €40.000, and above that, it’s 1,18%.
All reimbursements that are not directly related to the activities of an employee can be included in the discretionary margin. Like for instance the costs for a Christmas gift, staff outing or bicycle plan. Necessary costs, like travel costs or a meal during overtime, are not at the expense of the discretionary margin. Do the work related costs exceed the discretionary margin? Then you pay 80% tax on these costs. This amount is directly deductible and reduces the profit. So, that 80% percentage is less harmful than it initially seems.
Keeping payroll records
From the moment you hire the first employee, you are obliged to keep a salary administration. In addition to the payroll tax return referred to above, you also have to provide your staff with a pay slip every month and you must ensure that the salary is paid on time. In addition, you need to include certain information in the wage statement about, for example, the contract, the employee and the application of the payroll tax credit.
So there is a lot involved in keeping this administration. You can do this yourself, for example with payroll software. Or you can choose to outsource this to a bookkeeper.
