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Taking on my first employee

If you are about to take someone on for the first time, here is what to do, in order.

Draft: not yet reviewed by a practising accountant.

The short answer

1. Check pay and the right to work. 2. Register as an employer before the first payday. 3. Set up payroll and report pay to HMRC on or before each payday. 4. Set up a workplace pension from the day your first employee starts. 5. Decide who will run payroll: you, a bookkeeper or an accountant.

1. Check pay and the right to work

GOV.UK's step-by-step guide to employing someone says you must check they have the right to work in the UK, agree a contract, and agree a written statement of employment particulars.1

GOV.UK says the hourly rate for the minimum wage depends on the person's age and whether they are an apprentice, and that the rates change on 1 April every year. Check the current rates on GOV.UK before you agree pay.2

2. Register as an employer

GOV.UK says you must register before the first payday to get your employer PAYE reference number, and that you cannot register more than 2 months before you start paying people. HMRC sends the reference by letter.3 So leave time between registering and the first payday.

You must also tell HMRC about your new employee on or before their first payday.1

3. Run payroll each payday

On or before each payday, GOV.UK says you use payroll software to record the employee's pay, work out deductions such as tax and National Insurance, work out the employer's National Insurance contribution, produce a payslip, and report the pay and deductions to HMRC in a Full Payment Submission (FPS).4 HMRC guidance calls these payroll reports Real Time Information (RTI) submissions.6

4. Set up a workplace pension

GOV.UK says employers have to provide a workplace pension scheme for eligible staff as soon as their first member of staff starts work. This is called your "duties start date". You must enrol, and make an employer's contribution for, staff who are aged between 22 and State Pension age, earn at least £10,000 a year and normally work in the UK.5 Check the GOV.UK page for the full rules, including for staff who do not meet all three conditions.

5. Decide who runs it

This part is our judgement. You can run payroll yourself with payroll software. Some business owners prefer to hand it to a bookkeeper, a payroll provider or their accountant, who then handles the payday reporting, payslips and pension contributions. Ask whoever you choose:

  1. Will you register me as an employer, or do I do that?
  2. Will you handle the FPS each payday and the workplace pension?
  3. What do you need from me before each payday, and by when?
  4. What does it cost per employee or per payroll run?

If you already have an accountant, ask whether payroll is in your engagement letter or would be extra. See Accountant or bookkeeper?

Sources

  1. GOV.UK, "Employing someone: step by step", including "Tell HMRC about a new employee". gov.uk/new-employee. Checked 12 October 2026.
  2. GOV.UK, "National Minimum Wage and National Living Wage rates". gov.uk/national-minimum-wage-rates. Checked 12 October 2026.
  3. GOV.UK, "Register as an employer". gov.uk/register-employer. Checked 12 October 2026.
  4. GOV.UK, "Running payroll". gov.uk/running-payroll. Checked 12 October 2026.
  5. GOV.UK, "Workplace pensions for employers". gov.uk/workplace-pensions-employers. Checked 12 October 2026.
  6. GOV.UK, "What payroll information to report to HMRC". gov.uk. Checked 12 October 2026.