How to Do Payroll Yourself: Small Business Guide (2026)

Can You Really Do Payroll Yourself?

For a small team — and especially for your first employee — doing payroll yourself is entirely realistic. What makes payroll feel scary is not the arithmetic; it is the deadlines and registrations that carry penalties when missed. This guide walks the universal steps, with the country-specific pieces flagged so you know exactly what to look up for your jurisdiction.

Step 1: Register as an Employer

Before the first payday, the tax authority needs to know you employ people: an EIN and state accounts in the US, a PAYE scheme with HMRC in the UK, employer registration with your revenue authority elsewhere. Allow one to four weeks — this is the step people leave too late.

Step 2: Collect the Employee's Details Properly

• Tax identifiers and withholding declarations (W-4 in the US, starter checklist in the UK, local equivalents elsewhere)
• Right-to-work verification where required
• Bank details, agreed salary or hourly rate, and a written contract or offer letter

Step 3: Understand What a Payslip Is Made Of

• Gross pay — salary for the period, or hours × rate plus overtime
• Employee deductions — income tax withholding, social security/national insurance, pension or retirement contributions
• Net pay — what lands in their bank account
• Employer costs on top — your matching social contributions, typically adding 8–15% to the wage bill; budget for them from day one

Step 4: Run the Cycle, Every Period, on Time

• Calculate gross → deductions → net for each employee
• Issue payslips (legally required in most jurisdictions)
• Pay employees on the agreed date, without exception — nothing burns trust faster
• Remit withheld taxes to the authority by their deadline — this is where the penalties live, because withheld tax is not your money
• File the required periodic returns (each pay run in the UK's RTI; quarterly 941s in the US; local equivalents elsewhere)

Payroll for One Employee: The Honest Shortcut

One salaried employee is the easiest possible case: the numbers barely change month to month. Set up the registration correctly once, template the payslip, diarise the remittance deadline, and the monthly work is under an hour. The trap is treating "it's only one person" as a reason to skip registration or payslips — the obligations start at employee number one.

DIY Spreadsheet vs Software vs Bureau

• Spreadsheet: workable for one or two stable salaries if you are disciplined about rate changes each tax year — you are the compliance engine
• Payroll software: the sweet spot for most small teams. Bizpro Desk includes payroll alongside the rest of the business — staff records, hours, payslips, and the wage bill flowing straight into your expense reporting, with no per-employee surcharge
• Bureau/accountant: worth it when you have complex benefits, high turnover, or simply never want to think about it — at $30–$100+ per month plus per-payslip fees

The Mistakes That Actually Cost Money

• Spending withheld tax as cash flow — it was never yours
• Missing the employer-registration lead time before the first payday
• Misclassifying employees as contractors to avoid the above — the penalty case regulators love most
• No paper trail: keep payslips, calculations, and filings for the years your jurisdiction requires

Conclusion

Payroll yourself is a process, not a profession: register early, template the calculation, automate the reminders, and pay the authority on time. Start in a tool that keeps the records for you, and the day you grow past DIY, the history moves with you.