Hiring your first employee is an exciting milestone. It usually means your business is growing, your workload is increasing, and you're ready to invest in the next stage of your journey.
But becoming an employer also comes with new responsibilities, and payroll can feel overwhelming if you've never dealt with it before.
The good news? It doesn't have to be complicated.
Here's a simple checklist to help you get started.
1. Register as an Employer
Before you pay anyone, you'll need to register as an employer with HMRC.
This allows you to operate PAYE (Pay As You Earn), which is the system used to collect Income Tax and National Insurance from employees' wages.
It's best to do this before your employee's first payday to give everything plenty of time to be set up correctly.
2. Collect the Right Information
Before your new employee starts, you'll need some basic details, including:
Full name and address
Date of birth
National Insurance number
Start date
Bank account details
Tax information (usually from a P45 or a Starter Checklist)
Having the correct information from the beginning helps avoid payroll issues later on.
3. Decide How Much You'll Pay Them
Think about:
Their salary or hourly rate
How often they'll be paid (weekly or monthly)
Overtime rates, if applicable
Bonuses or commission
Holiday entitlement
Make sure you're paying at least the National Minimum Wage or National Living Wage where required.
4. Check Your Workplace Pension Duties
Most employers are legally required to provide a workplace pension and automatically enrol eligible employees.
Even if an employee isn't eligible to join straight away, you may still have duties as an employer.
This is an area that's often overlooked by new employers, so it's worth getting advice if you're unsure.
5. Run Payroll on Time
Each time you pay your employee, you'll need to:
Calculate tax and National Insurance.
Make any pension deductions.
Produce a payslip.
Report the payroll information to HMRC.
Pay your employee on time.
Missing deadlines can result in penalties, so having a reliable payroll process is important.
6. Keep Good Payroll Records
As an employer, you'll need to keep records of:
Employee pay
Tax deductions
National Insurance
Pension contributions
Sick pay
Maternity or paternity pay (where applicable)
Good record keeping makes life much easier if HMRC ever asks questions.
7. Understand Your Employer Costs
The amount you pay your employee isn't always the total cost to your business.
You may also need to budget for:
Employer's National Insurance contributions
Pension contributions
Holiday pay
Statutory payments
Training and equipment
Planning ahead helps you understand the true cost of employing someone and avoids unexpected surprises.
Don't Forget Their Employment Contract
Every employee should receive a written statement of employment particulars, often referred to as an employment contract.
This sets out important details such as pay, working hours, holiday entitlement and other terms of employment.
Having everything clearly documented helps both you and your employee understand what's expected from day one.
How Soldi Partners Can Help
Taking on your first employee is a big step, but you don't have to navigate payroll alone.
At Soldi Partners Accounting, we help businesses across Kent with payroll, bookkeeping, annual accounts and tax returns. We can take care of your payroll, make sure you're meeting HMRC requirements, and answer your questions in plain English—so you can focus on running your business.
If you're thinking about hiring your first employee, we'd be happy to help you get everything set up correctly from the start.
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