What should I check before running payroll for my first employee?

Start with an agreed employment record

Confirm the employer’s legal name and the employee’s role, start date, ordinary hours, pay frequency and remuneration structure. The written terms should explain the agreed pay and relevant benefits or allowances. A verbal promise of take home pay can create confusion if the payroll was configured using a gross amount. Resolve the intended commitment before processing the first payment.

Check the applicable employment conditions, current minimum requirements and any bargaining council or sector arrangements relevant to the role. The Basic Conditions of Employment Act addresses matters including written particulars, pay information and deductions, but applicability and additional requirements need assessment. Do not use an old wage table or another employer’s contract as proof that the proposed arrangement is compliant.

Confirm the employer obligations before configuring payroll

Establish which registrations, declarations and contributions apply to the business, including PAYE, UIF, SDL and compensation-related requirements where relevant. These are related but distinct obligations. Registering one tax type does not automatically establish that every employment obligation has been completed. Keep the registration references and effective dates accessible to the payroll preparer.

Ask who will prepare returns, review them, authorise payments and check the resulting account position. A payroll service provider may perform agreed tasks, but the employer still needs visibility over completion. Record the scope clearly. If a registration is pending, obtain advice on the actual obligations and next steps rather than assuming that a pending application removes the need to calculate or keep records.

Collect employee details securely

Obtain the employee’s correct name, identity or relevant identification details, contact information, tax reference where applicable and verified bank details. Use an appropriate secure process and collect only information needed for employment and payroll purposes. Do not send a full employee file through an open group chat or give unrelated staff access to identity and banking documents.

Check that names and numbers have been captured accurately and that any missing information has a responsible follow-up owner. An identity number is not interchangeable with a tax number. A payroll record that looks complete can still fail later validation if the fields contain placeholders. Resolve uncertainty through the appropriate official or provider process rather than inventing a number to make the system accept the record.

Define the first pay period carefully

The employee’s start date may fall after the beginning of the normal payroll month. Confirm the period being paid and the agreed, lawful method for any part-period calculation. Record attendance, hours, leave and authorised variable pay that affect the first run. Do not assume that every payroll system uses the same proration method or that a default matches the employment agreement.

Identify payroll cutoff and payment dates, including the time needed for review and bank authorisation. A new employee may submit a claim or overtime record after the cutoff; establish how it will be handled and communicated. Keep the pay period distinct from the date the bank transfer clears so the records can be understood later.

Review the calculation in separate layers

Use the applicable current tax year and payroll rules. Do not calculate PAYE by applying a remembered flat percentage to every salary. Benefits, deductions, employment periods and other facts may affect the calculation and reporting.

Illustrative example: a part-month first run

A fictional employee starts halfway through the business’s pay period. The employment record specifies a monthly gross amount, but the payroll administrator initially enters a full month without checking the start date. The reviewer catches the mismatch before payment and asks for the correct part-period calculation under the applicable terms and rules. No salary or tax amount is prescribed by this example.

The reviewer also finds an unapproved reimbursement entered as a taxable allowance. The receipt and purpose need review so the item can be classified correctly. A system total that adds up mathematically does not establish that the underlying pay components are correct. Each component needs the appropriate evidence and treatment.

After correction, the employer approves the draft payslip and payment schedule. The payroll preparer retains the original query, revised calculation and approval. This trail explains why the first run differs from the standard monthly pay and reduces confusion when the employee compares the next payslip with the first one.

Separate payment from declarations and remittances

Paying net wages to the employee does not complete the employer’s tax and contribution obligations. SARS describes the monthly employer declaration and the reconciliation of declarations, payments and employee certificates. Track those activities separately from the salary transfer. A payslip showing a deduction does not prove that the corresponding amount reached the relevant recipient.

Prepare a calendar using the actual current requirements and the business’s filing and payment arrangements. Identify who will confirm each submission and payment. Retain acknowledgements and bank evidence, then check allocation where necessary. Do not assume that a saved declaration, a payment request or an instruction sent to the bank is the same as completed processing.

Check the payslip and explain the result

Review the payslip for the correct employer, employee, period, pay components, deductions and net amount. The employee should be able to understand what has been paid and raise a factual query. Explain unusual first-month items, such as a part-period amount or an approved once-off reimbursement, without exposing other employees’ information.

Verify the bank payment beneficiary and amount against the approved payroll schedule. Use the business’s ordinary payment controls and independent checks for changed bank details. A correct payslip can still result in an incorrect payment if an old beneficiary or mistyped amount is used. After release, keep the payment confirmation and investigate any rejection or return promptly.

Keep records that support the next run

Retain the employment terms, employee master details, approved hours or attendance, variable pay evidence, calculation, payslip, approval and payment records. Keep leave and year to date balances in the payroll system with the relevant supporting history. Access should be limited to those who need the information, and retention should follow the applicable legal requirements and any ongoing dispute or investigation.

Create a change process for later salary adjustments, banking updates, benefits and employment status. A manager’s informal message should not silently replace the approved terms. Record the effective date and authority for each change so future runs can be checked against the right version. The first payroll is an opportunity to establish a repeatable control, not just make one bank transfer.

Reconcile the employer cash requirement

Before release, compare the available cash with the full payroll payment schedule. Net wages are only one part of the requirement. Amounts withheld from employees and additional employer costs may leave the bank on different dates, but they still need funding. Do not treat the difference between gross and net pay as spare cash available for unrelated spending.

Keep each recipient and payment reference distinct and check the total against the approved payroll reports. If the bank balance is insufficient, escalate before the pay date and obtain appropriate advice. Changing the employee’s agreed pay inside the payroll system to fit available funds is not a valid substitute for resolving the funding and employment issues.

Resolve exceptions before treating payroll as complete

Maintain a short list of unresolved registration, employee-data or calculation issues and assign a next action. If a tax or contribution question remains, seek appropriate advice with the actual facts. Do not clear an exception by changing the employee’s details to a convenient but inaccurate value. Recheck the first run after posting to the ledger to confirm that wages, deductions and employer costs reconcile.

Vatco’s payroll services can help organise the calculation and recurring administration. Bring the employment terms, start date, registration references and approved variable pay records. The related hiring cash forecast article helps assess the funding commitment before it reaches the first payroll.