Running payroll for the first time can feel daunting, especially if you’re a founder or director who’s used to wearing lots of different hats. But once you understand the process, it’s actually one of those admin tasks that becomes part of your routine.

The good news is that you don’t need to hire an accountant or payroll bureau to pay yourself. Many small business owners choose to run payroll themselves using payroll software. As long as you follow HMRC’s requirements and report your payroll correctly, there’s no reason you can’t manage it in-house.

In this guide, we’ll explain how to set up payroll for yourself, walk you through each step of the payroll process and highlight the key deadlines you’ll need to keep on top of.

In this article:

• Can you do payroll yourself?
• How to run payroll yourself
• Checklist: annual payroll requirements
• Changes for payroll in 2026/27
• Do I have to use payroll software?
• Should I run payroll yourself?

Yes – if you’re a founder or director of a limited company, there’s no legal reason why you can’t run your own payroll.

In fact, many small business owners choose to manage payroll themselves, particularly if they’re the only employee in the business.

That said, running payroll isn’t simply a case of transferring money into your personal bank account. You’ll need to:

• register as an employer with HMRC
• set up PAYE
• use payroll software
• calculate tax and National Insurance correctly
• report payments to HMRC each time you run payroll
• keep accurate payroll records

It might sound like a lot, but payroll software automates much of the process, making it much easier than doing everything manually.

Good to know: If you haven’t registered your company as an employer yet, read our guide on how to register for PAYE before getting started.

Once you’ve completed the initial setup, payroll usually follows the same process each time you pay yourself.

Let’s look at each step in more detail.

Before you can pay yourself or employees through payroll, you’ll need to register as an employer with HMRC. Even if you’re the only employee in your business, this still applies.

Once registered, HMRC will send you:

• your PAYE reference number
• an Accounts Office reference
• instructions for submitting payroll information

You’ll usually need to register before your first payday, so don’t leave this until the last minute.

It’s a legal requirement to use payroll software when reporting payroll information to HMRC. 

Payroll software helps you:

• calculate tax and National Insurance
• produce payslips
• submit payroll information to HMRC
• keep payroll records
• calculate pension contributions if applicable

There are both free and paid options available.

For example: HMRC offers free payroll software for some employers, while many commercial providers include additional features such as automatic pension calculations, employee self-service portals and payroll reporting.

If you’re looking for do-it-yourself payroll software, think about:

• how many employees you have (or will have)
• whether you want cloud-based software
• if it integrates easy with your accounting software
• ease of use

Even if you’re the owner of the company, you’ll need to add yourself as an employee within your payroll software.

You’ll usually be asked for information when you do this, so have this to hand. Here’s what information you’ll need to submit:

• your name and address
• date of birth
• National Insurance number
• tax code
• start date
• salary

Remember to double-check everything before saving, as mistakes can lead to incorrect tax calculations later, and nobody wants to be hit with a surprise tax bill.

How often you run payroll is entirely up to you. Most small businesses choose to pay directors and employees:

• Monthly (the most common option)
• Every four weeks
• Weekly (less common)

For many founder-directors, a monthly payroll is the simplest option. It aligns with how many business expenses are paid, makes budgeting easier and reduces the amount of payroll admin you’ll need to do throughout the year.

Whatever schedule you choose, it’s a good idea to stick to it. Paying yourself on the same date each month helps keep your payroll records consistent and makes it easier to plan your cash flow.

For example: if you decide to pay yourself on the last working day of each month, try to continue using that schedule throughout the tax year unless there’s a genuine reason to change it.

Once you’ve decided on your pay date, it’s time to process your payroll.

Processing payroll simply means telling your payroll software how much you’re paying yourself (and/or employees). The software then calculates any deductions and prepares the information you’ll need to report to HMRC.

Your payroll software will automatically work out things like:

• Gross pay (your salary before deductions)
• Income Tax
• Employee National Insurance
• Employer National Insurance (if applicable)
• Pension contributions (if applicable)

Let’s look closer at an example:
Sarah runs a small marketing agency and pays herself a monthly salary through PAYE. Before her chosen payday, she enters her monthly salary into her payroll software. The software automatically calculates any Income Tax and National Insurance due before generating her payslip and preparing the information she’ll need to submit to HMRC.

Using payroll software takes much of the manual work out of payroll, helping reduce the risk of errors and ensuring your calculations are up to date with the latest tax rules.

One piece of payroll jargon you’ll probably come across is Full Payment Submission (FPS).

An FPS is simply the payroll report you send to HMRC every time you pay employees — including yourself.

Your payroll software will usually generate this automatically.

The FPS tells HMRC:

• who you’ve paid
• how much you’ve paid them
• how much tax and National Insurance has been deducted

You’ll normally need to send the FPS on or before payday.

Every employee is entitled to receive a payslip, including directors who pay themselves through payroll.

Even if you’re the only employee in your business, you’ll still need to produce a payslip each time you’re paid. Most payroll software creates these automatically, so there’s very little extra work involved.

Your payslip should include:

• Gross pay (your salary before deductions)
• Income Tax deducted
• National Insurance deductions
• Pension contributions (if applicable)
• Net pay (the amount you’ll actually receive)

It’s worth keeping copies of your payslips alongside your payroll records. They can be useful if you ever need to prove your income, for example when applying for a mortgage or loan, or if HMRC asks for evidence of your payroll records.

Once payroll has been processed and reported to HMRC, you can pay your salary from your business account into your personal account.

It’s a good idea to use the same payment date each month to keep your records consistent.

If you’re also paying yourself through dividends, remember that dividends aren’t processed through payroll and follow different tax rules.

Running payroll doesn’t end once you’ve paid yourself. You’ll also need to pay any Income Tax and National Insurance you’ve deducted to HMRC.

Most employers pay HMRC monthly, although some smaller businesses may be able to pay quarterly. The deadline depends on how often you pay, but if you’re paying electronically (which most businesses do), payment is usually due by the 22nd of the following month.

Your payroll software will show you how much you owe, taking the guesswork out of your calculations. It will usually include:

• Income Tax deducted from salaries
• Employee National Insurance contributions
• Employer National Insurance contributions (if applicable)
• Student loan repayments and other deductions (if applicable)

You can pay HMRC using several methods, including online banking, Direct Debit or debit card. Just make sure you use the correct payment reference so HMRC can match the payment to your payroll account.

Running payroll isn’t just about paying yourself each month. There are a few additional tasks you’ll need to complete throughout the tax year to keep everything compliant with HMRC.

Here’s a handy checklist, but you can also find more information on reporting requirements from the government.

• Run payroll each payday
• Submit a Full Payment Submission (FPS) to HMRC on or before each payday
• Give employees (including yourself) a payslip every time they’re paid
• Pay any Income Tax and National Insurance due to HMRC by the relevant deadline
• Keep accurate payroll records

Once the tax year ends on 5 April, there are a few extra tasks to complete:

• Update your payroll software for the new tax year
• Send your final payroll submission for the tax year to HMRC
• Give each employee a P60 by 31 May if they’re still employed at the end of the tax year
• Report any taxable benefits or expenses, if applicable

Top tip: Set reminders for key payroll deadlines at the start of each tax year. Missing a submission or payment deadline could result in penalties, but a few calendar reminders can help you stay on track.

If you’re running payroll in the 2026/27 tax year, there are a few updates to be aware of. The good news is that most payroll software automatically applies the latest HMRC rates and thresholds.

Key changes include:

• Higher Employer National Insurance costs, which may increase the cost of employing staff. Read our guide to employer’s national insurance to learn more
• Updated National Minimum Wage and National Living Wage rates, so check employees are being paid correctly
• Updated payroll software, which should automatically apply the latest tax rules and statutory payment rates

Yes. If you’re running payroll in the UK, you’ll need to use payroll software to report payments and deductions to HMRC. This is a legal requirement for most employers.

The good news is that payroll software does most of the hard work for you. It calculates tax and National Insurance, generates payslips and submits payroll information directly to HMRC.

There are both free and paid options available, including HMRC’s own Basic PAYE Tools for eligible employers. If you’re looking for do it yourself payroll software, choose a solution that’s HMRC-recognised and suits the size of your business.

Running payroll yourself can save money and give you greater control over your business finances. It’s often a good option for one-person companies or businesses with only a handful of employees.

However, you’ll also be responsible for making sure payroll is accurate, submitting information to HMRC on time and keeping up with any changes to payroll rules.

If you’re happy to learn the process and your payroll is relatively simple, teaching yourself payroll can be a practical and cost-effective option. As your business grows or your payroll becomes more complex, you may decide it’s worth outsourcing instead.

Now that you know how to set up payroll for yourself and run it each pay period, you’ll be in a much stronger position to manage your company’s payroll with confidence.

Running payroll yourself might seem intimidating at first, but once you’ve completed the initial setup, it quickly becomes part of your regular business admin. With the right payroll software and a clear understanding of your responsibilities, many founder-directors successfully manage payroll themselves.

If you’re just starting your business journey, our company registration service can help you set up your limited company. Once you’re up and running, keeping your finances organised can make payroll much easier. A business current account like Countingup helps you separate business and personal finances, making it simpler to pay salaries, manage cash flow and keep accurate records for accounting and tax purposes.

Usually not. If you’re paying yourself through PAYE, you’ll normally need to run payroll every time you’re paid and submit a Full Payment Submission (FPS) to HMRC on or before payday.

HMRC requires employers to keep payroll records for at least three years from the end of the tax year they relate to. Keeping digital copies can make them easier to access if you ever need them.

Yes. HMRC offers free payroll software, called Basic PAYE Tools, for eligible employers. However, many businesses choose paid software for additional features, automation and ongoing support.