Your first payroll needs more than a salary figure and a bank transfer. You need a dependable route from agreed employment terms to calculated pay, employee information, HMRC reporting and pension administration. Preparing that route before payday gives you time to resolve missing information rather than guessing under pressure.
In this article
- Confirm your employer setup
- Collect employee and pay details
- Check payroll calculations and submissions
- Arrange payment and retain records
Start with the first payment date and work backwards. Your internal deadlines should leave space for someone to review the calculations, approve the payment and deal with a rejected submission or incorrect bank detail.
Before you configure the software
Confirm who you are employing and which business is their employer. The legal employer’s name should agree across the employment paperwork, PAYE registration and payroll records. A trading name alone can obscure this when you operate more than one business.
Check employment status rather than assuming that calling someone a contractor removes payroll responsibilities. HMRC’s employment status guidance explains the different categories. Right-to-work checks, employment terms and any necessary insurance also belong in your hiring plan; payroll setup does not replace them.
Budget for the full employment cost. Gross salary is only one component: employer National Insurance, pension contributions, software and administration can also affect your cash requirement. Allow for variable hours, holiday and relevant statutory payments rather than treating every month as identical.
Put the foundations in place
Register as an employer before the first payday where registration is required. HMRC says you cannot register more than two months before you start paying people. If the PAYE reference has not arrived when payment is due, its guidance explains how to run payroll, store the Full Payment Submission and submit it once the reference is available.
Choose software that supports your actual needs: pay frequency, employee numbers, pension calculations, HMRC submissions, payslips and reports. Check who will keep it updated and who can access it. If another person will process payroll, arrange the required permissions without sharing your own login credentials.
Agree the payment date, the period each payment covers and a method for calculating partial months. For hourly staff, decide how approved timesheets reach payroll. Write down how late overtime, absence information and expenses will be handled.
| Setup item | Evidence to have ready | Person to confirm it |
|---|---|---|
| Employer details | Correct legal name and PAYE references | Business owner |
| Pay terms | Salary or hourly rate, pay frequency, start date | Hiring manager |
| Employee identity | Accurate personal details and payroll record | Employee and payroll processor |
| Tax starting position | P45 or completed starter checklist | Employee |
| Pension arrangements | Scheme details and assessment process | Employer and scheme provider |
| Approval and payment | Named reviewer and authorised bank user | Business owner |
Gather each starter’s information
Collect the employee’s full name, address, date of birth, National Insurance number where available, start date and payment details securely. Ask for their P45. Where they do not have one, use HMRC’s starter checklist, including the relevant student or postgraduate loan information. Avoid choosing answers on the employee’s behalf because they appear likely.
Keep a distinction between information supplied by the employee and instructions later received from HMRC. Record the source and effective date of changes so another person can understand how the payroll record was created.
Workplace pension duties need attention from the outset. The Pensions Regulator explains that new employers’ duties begin when their first member of staff starts work. Use its guidance to establish which duties apply to your workforce and who will perform each task.
Rehearse the first pay run
Calculate a draft payroll before releasing anything. Compare the gross pay with employment terms and approved hours. Review starters, partial periods, pension treatment, tax information and deductions. A reviewer should investigate unexpected differences rather than merely checking that the report has a total.
Illustrative example: a small design business hires one salaried employee halfway through a month and one employee paid for approved hours. The owner agrees the salaried employee’s partial-month calculation in advance. The hourly employee’s manager signs off the timesheet. Payroll produces a draft showing both calculations separately, allowing the owner to check them before approval. These are hypothetical arrangements, not prescribed calculation methods.
On approval, follow the software’s finalisation process. The Full Payment Submission normally goes to HMRC on or before payday. Employees must receive payslips on or before payday. Retain the submission acknowledgement and verify that the bank payment matches the approved net-pay report.
Finish the cycle, then improve it
Paying staff does not finish payroll. Establish the HMRC payment due, send pension information, arrange contributions and post the payroll figures into your accounts. Reconcile the amounts owed with the payments actually made; a successful submission does not move money automatically.
After the first run, note missing information and delays. Adjust the timetable, give employees clear instructions and nominate a backup approver. A short, repeatable checklist is more useful than relying on the owner remembering every task.
For support, discuss your headcount, first payday, software and pension arrangements through EPOS Accountancy’s payroll enquiry. Confirm the services available, responsibilities and submission arrangements in an agreed scope. See the pricing page before requesting a tailored quote.