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Part of Get ready to employ someone for the first time: step by step

Find payroll 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

Decide which software features you need

You must get payroll software that reports PAYE information online, unless you’re exempt.

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

HMRC-recognised software

You can choose from HMRC-recognised payroll software.

HMRC cannot recommend one software product or service over another and is not responsible for any problems you have with software that you’ve bought.

If you change software

Some payroll software will not let you continue with the same employee Payroll IDs if you’ve already used them in other software.

If your payroll software does not let you do this, put ‘Yes’ in the ‘Payroll ID changed indicator’ for each employee in your Full Payment Submission (FPS).

Your PAYE bill may be calculated incorrectly, and payroll records duplicated, if you do not.

This page is Part of Get ready to employ someone for the first time: step by step

  1. Step 1 Check that you’re taking on someone as an employee

    Follow these steps if you want to take on someone with the employment status of ‘employee’ for the first time.

    1. Check who counts as an employee

    The rules are different if you want to take on someone with another type of employment status, such as agency staff, freelancers, consultants and contractors.

    1. Check your responsibilities when you take on someone with a different employment status and contract type

  2. and Check you can afford to take on employees

    1. Check how much the National Minimum Wage is
    2. Find out how much National Insurance you need to pay for your employees
    3. Check how much sick pay your employees are eligible for
    4. Check how much you need to pay towards your employee's pension
    5. Check how much Maternity Leave you need to pay your employees
    6. Check how much Paternity Leave you need to pay your employees

  3. Step 2 Make your workplace safe and accessible for employees

    1. Prevent discrimination
    2. Make your workplace accessible for employees with disabilities or health conditions
    3. Keep employee information and data safe
    4. Find out about fire safety
    5. Find out about health and safety on the Health and Safety Executive website

  4. Step 3 Register as an employer and set up PAYE

    You need to register with HMRC so you can pay tax and national insurance for your employees.

    1. Register as an employer and set up PAYE
    2. Choose how to run payroll
    3. You are currently viewing: If you decide to run payroll yourself, choose payroll software

  5. Step 4 Check your responsibilities around workplace pensions

    1. Understand your pension responsibilities as an employer

  6. Step 5 Get Employers' Liability insurance

    1. Find out about Employers' Liability insurance

  7. Step 6 Recruit and employ someone

    1. Employ someone