Taking on your first employee is an important step for any small business. Alongside agreeing a salary and preparing an employment contract, you need to understand your payroll responsibilities and register with HMRC where required.

For a UK limited company, setting up payroll correctly from the beginning can help prevent reporting errors and missed deadlines. Micro Entity Accounts can help small companies understand their accounting and compliance responsibilities, including how payroll information fits into their wider financial records.

If you are preparing to employ staff or pay yourself as a company director, this guide explains when to register as an employer, what information you need and how to prepare for your first payroll run.

When to Register as an Employer With HMRC

You normally need to register as an employer with HMRC before your first payday if you are going to employ staff and operate PAYE (Pay As You Earn).

PAYE is HMRC's system for collecting Income Tax and National Insurance through employment. It allows employers to deduct the appropriate amounts from employees' pay and report payments to HMRC.

You may need to operate PAYE if an employee:

• Earns £96 or more per week in the 2026/27 tax year.

• Receives expenses or benefits from the company.

• Has another job.

• Receives a pension.

• Has received certain state benefits.

Different circumstances can affect whether PAYE registration is required, so check HMRC's current guidance before making a decision.

A limited company may also need to register when its only paid employee is a director. Having just one director does not automatically remove the company's PAYE responsibilities.

You can register up to two months before you start paying employees, but you should not apply too early. Allow enough time for HMRC to process the registration and issue your references before the first payday.

If you are unsure whether your company needs to operate PAYE, read the official HMRC guidance on registering as an employer.

What You Need Before Registering

Preparing the necessary information before starting the application can make the registration process easier.

HMRC will need details about your business and the PAYE scheme you intend to operate.

Business information

Have the following details available:

• Registered business name

• Company registration number, if applicable

• Business address

• Business contact details

• Type of business activity

• Number of employees you expect to pay

• Date you expect to start paying staff

If you operate through a limited company, make sure the information agrees with your Companies House records.

Employer and director details

You may also need personal details for the person responsible for the PAYE scheme, including their name, address and National Insurance number.

Keep these details accurate, as incorrect information can delay the registration process.

Expected payroll dates

Think about when you intend to pay employees.

For example, will salaries be paid weekly, fortnightly or monthly? You should also have an approximate first payday and payroll start date in mind.

These details help you prepare the payroll arrangements and avoid leaving registration until the last minute.

Employee information

You do not normally need to enter every employee's full payroll information when making the initial employer registration. However, you should start collecting the information needed to set up their records.

This may include:

• Full name and address

• Date of birth

• National Insurance number

• Employment start date

• P45 from their previous employer, if available

• Bank details for salary payments

If an employee does not have a P45, you can use HMRC's starter checklist to obtain the information needed to work out their tax code and starter declaration.

Steps to Register as an Employer With HMRC

Most businesses can register online through GOV.UK. The exact process depends on the type of business and the number of directors.

Step 1: Open the HMRC registration service

Visit the official Register as an employer service.

Follow the instructions and select the option that applies to your business.

Limited companies with one to nine directors can generally register online. Other business arrangements may have different registration routes.

Step 2: Enter your business details

Provide the information requested about your company, including its name, address and business activity.

Check each entry before submitting the application. Incorrect details can create problems when HMRC sets up your PAYE scheme.

Step 3: Provide the employer information

Enter the details of the person responsible for the PAYE registration and provide the information requested about your expected employees and payroll arrangements.

You should also confirm when you expect to start paying staff.

Step 4: Submit the application

Review the information carefully and submit the registration.

Once HMRC has processed the application, it will issue your employer PAYE reference and Accounts Office reference.

The PAYE reference identifies your employer scheme. The Accounts Office reference is used when making payments to HMRC.

Keep both references somewhere secure and make sure your payroll provider or accountant has the information they need.

Step 5: Set up PAYE Online and payroll software

After registration, make sure you can access the relevant HMRC online services.

You will also need a suitable payroll system to calculate wages, deductions and employer contributions, then submit the required information to HMRC.

You can manage payroll yourself using software or appoint an accountant or payroll provider to handle it.

Your First Payroll Run

Once HMRC registration is complete, you can prepare to pay your employees.

The first payroll run is important because it establishes the employee records and begins the company's regular reporting responsibilities.

Collect and check employee details

Before calculating the first salary, collect the information needed for payroll.

Check the employee's P45 where available. If they do not have one, ask them to complete HMRC's starter checklist.

You should also confirm their salary, working arrangements, payment frequency and start date.

Calculate gross pay and deductions

Your payroll software or provider will calculate the employee's gross pay and any relevant deductions.

Depending on the employee's circumstances, these may include:

• Income Tax

• Employee National Insurance

• Student Loan repayments

• Workplace pension contributions

• Other authorised deductions

The company may also have employer National Insurance and pension contribution responsibilities.

Make sure the correct tax code and National Insurance category are used. Incorrect employee details can lead to inaccurate deductions.

Submit the Full Payment Submission

You must normally send a Full Payment Submission (FPS) to HMRC on or before the employee's payday.

The FPS reports information such as the employee's pay, tax deductions and National Insurance contributions. It also registers a new employee with HMRC when you pay them for the first time.

If you are using payroll software, it will usually guide you through preparing and submitting the FPS.

Pay employees and provide payslips

Once payroll has been checked, pay employees according to the agreed payment date.

You must provide employees with an itemised payslip on or before payday. It should show their gross pay and relevant deductions.

Keep payroll records and copies of the information submitted to HMRC. These records are important for checking payments, dealing with queries and preparing year-end reports.

Pay the amounts due to HMRC

After submitting payroll information, check how much the company owes HMRC.

Employers normally pay PAYE and National Insurance monthly. Some smaller employers may be able to arrange quarterly payments if their expected monthly PAYE bill is below £1,500.

Always check the payment deadline and use the correct Accounts Office reference when making payments.

What If Your PAYE Reference Has Not Arrived?

Sometimes a company may reach its first payday before HMRC has issued the employer PAYE reference.

This does not mean you should ignore the payroll deadline.

HMRC's guidance explains that you should run payroll, store the Full Payment Submission and send a late FPS once you receive the reference.

Keep a record of the steps taken and follow HMRC's instructions to make sure the outstanding submission is completed correctly.

Other Responsibilities After Registering

Registering as an employer is only the beginning. Once you start paying staff, you need to maintain payroll records and meet your ongoing employment responsibilities.

These can include:

• Reporting employees' pay and deductions to HMRC on time.

• Paying PAYE and National Insurance by the relevant deadlines.

• Keeping accurate payroll records.

• Providing payslips.

• Reporting employee starters and leavers.

• Completing required year-end payroll tasks.

• Assessing employees for workplace pension automatic enrolment.

• Maintaining appropriate employers' liability insurance.

You should also make sure payroll figures agree with the company's bookkeeping and annual accounts. Wages, employer National Insurance and pension costs need to be recorded correctly.

Final Thoughts

Registering as an employer with HMRC is an essential step when your company starts paying employees through PAYE. Completing the registration in good time gives you the references and access needed to prepare your payroll properly.

Before applying, organise your business details, decide when employees will be paid and choose how payroll will be managed. Once registration is complete, make sure the first FPS is submitted on time and that all payroll records are retained.

For small companies, getting these arrangements right from the beginning can make ongoing payroll administration much easier. Micro Entity Accounts provides accounting support for UK businesses, helping directors manage their company records and statutory responsibilities. You can also explore our company accounts and filing resources for further guidance.