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Payroll Guide For New Business Owners

The Payroll guide for new business owners is provided by Thecbsltd located in Chalfont St Peter, Gerrards Cross to help if you are a new business owner at the start of setting up your business. If your business is looking to keep its payroll services in house then this Payroll Guide for new business owners page gives an insight to some of the things required of an employer when employing staff. click on the links to the HMRC relevant pages for further details.

Employing staff for the first time

There are 7 things you need to do when employing staff for the first time

  1. Decide how much to pay someone - you must pay your employee at least the National Minimum Wage.

  2. Check if someone has the legal right to work in the UK. You may have to do other employment checks as well.

  3. Check if you need to apply for a DBS check (formerly known as a CRB check) if you work in a field that requires one, eg with vulnerable people or security.

  4. Get employment insurance - you need employers’ liability insurance as soon as you become an employer.

  5. Send details of the job (including terms and conditions) in writing to your employee. You need to give your employee a written statement of employment if you are employing someone for more than 1 month.

  6. Tell HM Revenue and Customs (HMRC) by registering as an employer - you can do this up to 4 weeks before you pay your new staff.  

  7. Check if you need to automatically enrol your staff into a workplace pension scheme.

Payroll Guide for New Business Owners
Employing Staff for the first time

Register as an Employer

You normally need to register as an employer with HM Revenue and Customs (HMRC) when you start employing staff, or using subcontractors for construction work.

You must register even if you’re only employing yourself, for example as the only director of a limited company.

You must register before the first payday. It usually takes up to 5 days to get your employer PAYE reference number. You cannot register more than 2 months before you start paying people.

If your business starts employing people on or after 6 April, you’ll get your employer PAYE reference number by 17 May.

To pay an employee before you get your employer PAYE reference number, you should:

  1. Run payroll.

  2. Store your full payment submission.

  3. Send a late full payment submission to HMRC.

Running payroll


  1. Overview

  2. Employees' pay

  3. Deductions

  4. Payslips

  5. Reporting to HMRC: FPS

  6. Reporting to HMRC: EPS

  7. Paying HMRC

  8. Sending an FPS after payday

  9. Reporting employee changes

  10. Changing paydays

Sending an FPS after payday

If you send a late Full Payment Submission (FPS) without a valid reason, you may get:

When you can send a late FPS report

In certain situations you can send a Full Payment Submission (FPS) after you pay your employee.

Register as an Employer
Running Payroll

Your employee does not give you a P45 and is either

paid less than £120 a week or has worked with you for

less than a week.

Your employees’ payday is on a non-banking day, for

example weekend or bank holiday.                                                                                       

You make an ad hoc payment outside of your regular     

payroll. For example you’re told after you’ve sent your

FPS about a new starter or a missed overtime

payment. (Payments made regularly outside your

normal payroll run are not ad hoc).

You pay your employee an expense or benefit where     

you must pay National Insurance, but not Income Tax,

through payroll. This depends on the benefit.

You cannot calculate or report your employee’s pay in    

advance because it’s based on their work on the day.

For example harvest workers paid based on how much

they pick.

You make certain non-cash payments to your                



You have not received your employer PAYE reference    


When to report

Within 7 days of paying your employee.

On the next banking day - but enter the regular

payment date in the ‘payment date’ field and

select ‘Late reporting reason’ code G.

In your next regular FPS or an additional FPS.

Within 14 days of the end of the tax month.

Within 7 days of paying your employee.

As soon as possible within 14 days of the end of

the tax month, or when you deduct tax and

National Insurance (if earlier). For complex

situations (for example when exercising share

options) contact HMRC.

As soon as possible after you receive your

employer PAYE reference - select ‘Late reporting

reason' code G.

Put the reason for reporting after payday on your FPS for each late submission. If you do not, or if HMRC disagrees with the reason or you do not send an FPS, they may send you an online penalty warning message and a penalty.

Viewing late FPS reports in your HMRC online account

If you send an FPS in the same tax month as you paid your employees, you can view the report in

your HMRC online account from the 12th of the next tax month.

This is different if you send an FPS in the tax month after payday.

Late FPS sent (in tax month after payday)                             HMRC online account updated

Between 6th and 11th                                                         By the 14th

Between 12th and 19th                                                        Within 2 days

On or after the 20th - and you did not send a FPS the             Within 2 days

previous tax month

On or after the 20th - and you sent a FPS the previous tax       By the 12th of the next tax month


Automatic Enrolment

What is automatic enrolment?

Under the Pensions Act 2008, every employer in the UK must put certain staff into a workplace pension and pay into it. This is called 'automatic enrolment'.

The Pensions Regulator is responsible for ensuring that all employers comply with workplace pension law. It is important that you understand what you'll need to do and prepare early.

Does automatic enrolment apply to me?

Whether you're an architect, a newsagent, have a personal care assistant or a nanny, you are an employer from the day your first member of staff started working for you and you have legal duties.

If you are employing staff for the first time, your legal duties for automatic enrolment begin on the day your first member of staff starts work. This is known as your duties start date. You should start preparing early in anticipation for this, so you know what you'll need to do.

How can I find out what I'll need to do?

What you need to do will depend on whether you have staff who need to be put into a pension scheme or not. All employers have duties, which include completing an online declaration of compliance to tell us what you've done for automatic enrolment.

Use our online tool to find out what you'll need to do for automatic enrolment.

Ongoing duties

Each time you pay your staff (including new starters), you must monitor their age and earnings to see if they need to be put into a pension scheme and how much you need to pay in.

Find out more about your ongoing duties.

Understanding your costs

You may need to think about one-off costs to set up automatic enrolment, as well as the ongoing cost of paying money into the scheme and managing the process. Read more about understanding your costs.

Guidance and support

The Pensions Regulator will give you guidance and tools to help you meet your automatic enrolment duties. We will also contact you to remind you of your legal duties. You may also wish to speak with your business adviser, for example your accountant, to see what support they can give you.

Automatic Enrolment
Find payroll software
  1. Overview

  2. Free software

  3. Paid-for software

  4. If you change software


If you decide to run payroll yourself, you need payroll software to report to HM Revenue and Customs (HMRC). The software will help you with tasks like:

  • recording your employees’ details

  • working out your employees’ pay and deductions

  • reporting payroll information to HMRC

  • working out how much you need to pay HMRC

  • calculating statutory pay, for example maternity or sick pay

HMRC-recognised software

HMRC tests payroll software to check it can report PAYE information online and in real time (RTI).

You can choose from free payroll software (if you have fewer than 10 employees) and paid-for software that has been tested and recognised by HMRC.

You should consider which features you need. For example, some software will not let you:

Find Payroll software
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