Set yourself up as an employer

Choosing a payroll system

• As an employer, you are responsible for keeping a record of:
• your employee's details
• all payments you make to your employee
• all deductions for income tax, National Insurance contributions (NICs) and student loans
• all employer's NICs

This record, and the system you use to calculate PAYE and NICs, is known as the payroll. As soon as you take on a new employee, you should set up a payroll record for them.

What are the options?
You have three main options for running your payroll:

• manual payroll - you can keep written records of each employee's details, and calculate PAYE and NICs yourself
• computerised payroll - you can buy specialised payroll software, and use the computer to store employee records and calculate PAYE and NICs
• payroll service - you can pay a specialist agency to look after all the necessary records, calculations and paperwork

However your payroll is operated, as an employer you are legally responsible for deducting PAYE and NICs, and paying them to HM Revenue & Customs.

Call the Helpline
Before you make a decision about your payroll, it's a good idea to call the HM Revenue & Customs New Employers Helpline on Tel 0845 60 70 143 to discuss the possibilities, particularly if you're unsure about calculating PAYE and NICs yourself.

Subjects covered in this guide

• Introduction
• Who counts as an "employee"?
• First steps in taking on a new employee
• The New Employer's Starter Pack
• Dealing with a new employee's P45
• What if my new employee doesn't have a P45?
• When a new employee doesn't have or know their NI number
• Choosing a payroll system
• Operating the payroll manually
• Using payroll software
• Arranging payment for your new employee
• Paying your employee for the first time

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