Before you can pay your first employee, you’ll usually need to register as an employer with HMRC. It’s one of the first steps in setting up payroll and an important legal requirement for most businesses taking on staff.
Taking on your first employee is an exciting milestone for any business. It often marks a new stage of growth, but it also brings a number of legal responsibilities. One of the first questions many employers ask is: “When do I need to register as an employer with HMRC?”
Register before your first payday, and no more than two months before you start paying employees. Once you’ve agreed a start date, begin the process — HMRC references can take several working days to arrive.
The good news is that registering is a relatively straightforward process. The key is making sure you do it at the right time, so you’re ready to pay your employee correctly and meet your legal obligations from day one.
Employing staff for the first time? See our full guide to hiring your first employee and download the free First Employee Checklist.
In most cases, if you’re employing someone and need to operate PAYE (Pay As You Earn), you’ll need to register as an employer with HMRC.
Whether PAYE applies depends on your employee’s circumstances, so it’s important not to assume that registration isn’t required simply because someone is working part-time or earning a relatively low wage.
If you’re taking on your first employee and you’re unsure whether you need to register, it’s worth checking your obligations before they start work.
HMRC recommends registering before your first payday.
You cannot register more than two months before you begin paying employees, so once you’ve agreed a start date, it’s sensible to begin making the necessary arrangements.
After registering, HMRC will issue your employer references, which can take several working days to arrive. Leaving registration until the last minute can create unnecessary pressure and may delay your first payroll.
To register as an employer, you’ll normally need details such as:
Having this information ready in advance will help make the registration process straightforward.
Once your registration has been processed, HMRC will provide you with:
These references are required when reporting payroll information and paying Income Tax and National Insurance to HMRC.
You’ll also need suitable payroll arrangements in place so that your employee is paid correctly and all required information is submitted to HMRC on time. Many small businesses choose to outsource payroll so everything is handled accurately from the start.
Registering with HMRC is only one part of employing staff.
Before your employee starts, you should also make sure you have:
Taking time to prepare these before your employee’s first day can help avoid problems later and ensure your business remains compliant. Our guide to employee handbooks explains why clear policies matter, even when they’re not legally required.
When employing staff for the first time, some of the most common mistakes include:
Planning ahead makes the whole process much smoother and gives both you and your employee confidence from the outset.
Taking on your first employee is an exciting step for any business, but it comes with important legal responsibilities.
Registering as an employer with HMRC is one of the first tasks to complete, and getting organised early will help ensure everything runs smoothly from your employee’s first payday.
If you’re preparing to employ staff for the first time and would like support with employment contracts, HR documentation, onboarding or wider compliance, Crawford Consultancy provides practical, friendly support to help businesses across Falkirk, Stirling and Central Scotland build strong foundations from the very beginning.
Whether you need help registering as an employer, setting up payroll, or getting contracts and HR documentation in place before your new starter begins, I’m here to make the process straightforward.
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