Set yourself up as an employer

Using payroll software

A computerised payroll will almost certainly be more convenient and less time-consuming to operate than carrying out manual calculations, particularly if you're going to employ a number of people.

What will the payroll software do?
You'll have to record the employee's details initially, using information from the form P45 or form P46. However, once you've done this, the software will:

• calculate income tax, National Insurance contributions (NICs) and student loan deductions every payday
• calculate the NICs you have to pay as an employer
• produce pay statements for your employees
• keep records of payments and deductions

The software will also produce the figures you'll need at the end of the tax year, and help you deal with other payroll-related events, for example if an employee leaves.

Your software provider will send updates as and when necessary - for example, if a tax rate changes following the Budget. Make sure you install these updates so that all calculations are carried out correctly.

Choosing your software
If you buy a payroll software package, make sure that it meets the HM Revenue & Customs Payroll Standard - look out for the Payroll Standard logo. This means that the software has been officially tested and approved for payroll purposes.

Read information on the Payroll Standard Accreditation Scheme at the HM Revenue & Customs website.

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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