Steps
- Register as an employer with HMRC (even if you’re just paying company directors)
- Figure out if you need a pension scheme
- Set up accounting software
- Set up a payroll software
1. Register as an employer with HMRC
To run payroll, you first need to register as an employer. This is also known as “registering for PAYE”.
PAYE stands for “Pay As You Earn”. It’s HMRC’s system to collect income tax and National Insurance. That also includes things like student loans.
You can register as an employer here.
Once you’ve applied to register online, HMRC will send you a letter in the post. This can take 1-3 weeks. Once it’s arrived, you’ll need to enter the activation code on the letter online. Don’t wait too long, or it will expire and you’ll have to get the letter sent out again.
When your registration is complete, when you login to your Government Gateway portal you’ll now see a box called “PAYE for employers” (pictured below). If you can’t see it, you’re either not registered yet or are logging in to a different Government Gateway account (sometimes people log in to their personal ones by mistake).
⚠️ If you wait more than 2 months after registering before running payroll, HMRC may de-activate your registration as an employer, meaning you’ll have to call them again to re-activate it.
If you do need to re-activate your employer registration, you should call HMRC to ask them to re-activate it for you.
2. Figure out if you need a pension scheme
Do I need to set up a pension scheme?
You need to set up a pension scheme in the UK if you have “eligible staff”. If you don’t have any eligible staff but would still like to contribute to a pension scheme, you can still set one up.
You can see the conditions for what “eligible” means here.
If you’re using a modern payroll software like Onfolk, it will automatically figure out which of your staff are eligible, based on the latest criteria from the Government. Onfolk can also enrol those who meet the criteria in your pension scheme automatically.
Choosing a pension provider
Onfolk has a handy comparison table to help you choose the best pension provider for you.
Most businesses in the UK use NEST, with Smart Pension being a popular alternative.
Submitting and paying pension contributions
Typically, you’ll pay your pension provider by setting up a direct debit, so that the payments are taken automatically.
A modern payroll software like Onfolk will automatically notify your pension provider exactly how much they need to take. It does this by calculating the amount of pension contributions due for each employee in your business, and also the amount of pension contributions due for the business itself.
3. Set up accounting software
This step is optional, but worth doing to have your accounts in order.
Xero is the most popular choice. At Onfolk, we think it’s the best currently out there.
Onfolk integrates with Xero, so that it’s updated automatically with your payroll numbers at the end of each month.
4. Set up a payroll software
Once you’ve registered as an employer and got your pension scheme and accounting software in order, you need to set up your payroll software in order to pay your employees.
The government has a handy list of all of the HMRC recognised payroll softwares.
If you’d like to get set up fast and minimise your admin each month, book a demo or sign up to Onfolk. We’d be happy to help!
Steps
- Register as an employer with HMRC (even if you’re just paying company directors)
- Figure out if you need a pension scheme
- Set up accounting software
- Set up a payroll software
1. Register as an employer with HMRC
To run payroll, you first need to register as an employer. This is also known as “registering for PAYE”.
PAYE stands for “Pay As You Earn”. It’s HMRC’s system to collect income tax and National Insurance. That also includes things like student loans.
You can register as an employer here.
Once you’ve applied to register online, HMRC will send you a letter in the post. This can take 1-3 weeks. Once it’s arrived, you’ll need to enter the activation code on the letter online. Don’t wait too long, or it will expire and you’ll have to get the letter sent out again.
When your registration is complete, when you login to your Government Gateway portal you’ll now see a box called “PAYE for employers” (pictured below). If you can’t see it, you’re either not registered yet or are logging in to a different Government Gateway account (sometimes people log in to their personal ones by mistake).
⚠️ If you wait more than 2 months after registering before running payroll, HMRC may de-activate your registration as an employer, meaning you’ll have to call them again to re-activate it.
If you do need to re-activate your employer registration, you should call HMRC to ask them to re-activate it for you.
2. Figure out if you need a pension scheme
Do I need to set up a pension scheme?
You need to set up a pension scheme in the UK if you have “eligible staff”. If you don’t have any eligible staff but would still like to contribute to a pension scheme, you can still set one up.
You can see the conditions for what “eligible” means here.
If you’re using a modern payroll software like Onfolk, it will automatically figure out which of your staff are eligible, based on the latest criteria from the Government. Onfolk can also enrol those who meet the criteria in your pension scheme automatically.
Choosing a pension provider
Onfolk has a handy comparison table to help you choose the best pension provider for you.
Most businesses in the UK use NEST, with Smart Pension being a popular alternative.
Submitting and paying pension contributions
Typically, you’ll pay your pension provider by setting up a direct debit, so that the payments are taken automatically.
A modern payroll software like Onfolk will automatically notify your pension provider exactly how much they need to take. It does this by calculating the amount of pension contributions due for each employee in your business, and also the amount of pension contributions due for the business itself.
3. Set up accounting software
This step is optional, but worth doing to have your accounts in order.
Xero is the most popular choice. At Onfolk, we think it’s the best currently out there.
Onfolk integrates with Xero, so that it’s updated automatically with your payroll numbers at the end of each month.
4. Set up a payroll software
Once you’ve registered as an employer and got your pension scheme and accounting software in order, you need to set up your payroll software in order to pay your employees.
The government has a handy list of all of the HMRC recognised payroll softwares.
If you’d like to get set up fast and minimise your admin each month, book a demo or sign up to Onfolk. We’d be happy to help!
