When exactly do I need to register as an employer with Revenue?

You must register before your employee's first pay date, not their first day of work. The safest approach is to register on ROS as soon as you've confirmed you're hiring. Late registration is a compliance issue and can trigger Revenue follow-up, so don't leave it to the last minute.

What happens if I don't have an RPN for a new employee?

If you can't get an RPN before running payroll, you must apply emergency tax. Emergency tax means the employee gets little or no tax credits, so their take-home pay is significantly lower than it should be. It gets corrected once Revenue issues the RPN, but it's a poor experience for a new hire. Get the employee's PPS number on day one and pull the RPN immediately.

Do I need payroll software or can I calculate it manually?

You need Revenue-compatible payroll software. Since PAYE Modernisation came into effect in January 2019, employers are required to submit a Payroll Submission Report electronically to Revenue on or before every pay date. This cannot be done with a spreadsheet. Revenue publishes a list of approved software providers, and there are affordable cloud options for small employers.

Is employer PRSI on top of the salary I agreed with the employee?

Yes. Employer PRSI is a separate cost paid by you, not deducted from the employee's wages. The rate for most employees is 11.15%, applied to the employee's gross earnings. This is an additional payroll cost you need to factor into your budget before agreeing any salary.

Do I need to give my employee a written contract?

Yes. Under Irish employment law, employees must receive a written statement of their core terms of employment within 5 days of starting work. A full written contract should follow within two months. This is separate from your Revenue obligations but equally important. The Workplace Relations Commission has guidance on what must be included.

Hiring First Employee Ireland: Tax Checklist

Hiring your first employee is exciting, but the paperwork can stop you cold. Between registering as an employer, setting up payroll, and making sure you're compliant with Revenue from day one, there's a lot to get right before that person starts. Miss a step and you could face penalties, incorrect tax deductions, or an employee who doesn't get paid correctly on their first day. This checklist walks you through what you actually need to do, in the right order.

In short

You must register as an employer with Revenue BEFORE your employee's first payday, not after

Every pay period you must fetch a Revenue Payroll Notification (RPN) for each employee before processing payroll

You report payroll to Revenue in real time using a Payroll Submission Report (PSR) on or before each pay date

Employer PRSI is a real cost on top of gross wages. Factor it into your budget before you agree a salary

You also have non-tax obligations: a written contract, registering with the Workplace Relations Commission if required, and keeping proper employment records

Step 1: Register as an Employer with Revenue

Before your employee earns their first euro from you, you need to be registered as an employer. You do this through Revenue's myAccount or ROS (Revenue Online Service). According to Revenue, you must register before the first pay date. Don't wait until the end of the month. The registration gives you an employer registration number, which your payroll software will need. If you're already registered for income tax or VAT as a sole trader, you still need a separate employer registration.

The registration process on ROS is straightforward but it does require that your own tax affairs are in order. If you have outstanding returns or liabilities, sort those first. Once registered, Revenue will set up your employer record and you'll be able to access the PAYE Modernisation system, which is how all payroll reporting in Ireland works since 2019.

Step 2: Collect Your Employee's Details and Get Their RPN

Before you run a single payslip, you need two things: your employee's Personal Public Service (PPS) number, and their Revenue Payroll Notification (RPN). The RPN is the document Revenue issues that tells you what tax credits and cut-off points to apply to that employee's wages. Without it, you must tax the employee on an emergency basis, which means higher deductions and a frustrated new hire.

You fetch the RPN through your payroll software or directly through ROS. Revenue updates RPNs automatically when an employee's tax situation changes, so you should check for an updated RPN at the start of every pay period, not just when someone starts. If an employee has another job or has recently left a job, their RPN will reflect that. Acting on an outdated RPN is a common and avoidable mistake.

What this means in practice

Say you hire a part-time bookkeeper starting on the 1st of the month, with a monthly pay date of the 28th. Here's the sequence: register as an employer on ROS before the 1st, ask the employee for their PPS number on their first day, pull their RPN from ROS within the first day or two, enter their details into your payroll software, run payroll before the 28th, and submit your Payroll Submission Report (PSR) to Revenue on or before the 28th. Revenue receives the payroll data in real time. You then pay the employee and separately pay Revenue the PAYE, PRSI, and USC you've deducted, plus your employer PRSI contribution. The payment to Revenue is due by the 23rd of the following month if you file and pay through ROS. Note that the 14th of the following month is the return deadline and the date from which interest begins to accrue if the return has not been accepted by then.

Step 3: Understand What You're Deducting and What You're Paying

As an employer, you're responsible for deducting three things from your employee's gross pay: Income Tax (PAYE), Pay Related Social Insurance (PRSI) on the employee's side, and Universal Social Charge (USC). You don't set the rates yourself. The RPN tells you the correct credits and cut-off points for that individual. What you do need to understand is that you also pay employer PRSI on top of the employee's gross wages. For most employees, the employer PRSI rate is 11.15%. This is a real cost that many first-time employers forget to budget for. If you agree a salary of €35,000, your actual cost is higher once employer PRSI is added.

USC and PRSI rates vary depending on the employee's earnings and circumstances. The RPN handles the individual calculation, but you should understand the general structure so you can have honest conversations with employees about take-home pay. A good payroll software package will handle the maths, but you remain legally responsible for the accuracy of every submission.

Common mistakes

Registering as an employer after the first pay date: Revenue requires registration before the first payday. Late registration can trigger penalties and creates a messy correction process. Register on ROS as soon as you know you're hiring.

Skipping the RPN check each pay period: RPNs change. An employee might have updated their tax credits or started a second job. Always pull a fresh RPN before processing payroll, not just at onboarding.

Forgetting employer PRSI in your salary budget: The 11.15% employer PRSI rate is not deducted from the employee. It's an additional cost to you. A €40,000 salary costs you meaningfully more than €40,000. Build this into any salary offer.

Not issuing a written contract: This isn't a Revenue issue, it's a legal one. Under Irish employment law, employees are entitled to a written statement of their core terms within 5 days of starting. Failing to provide this can create problems at the Workplace Relations Commission.

Step 4: Set Up Compliant Payroll Software

Ireland's PAYE Modernisation system, which has been in place since January 2019, requires that every employer submits a Payroll Submission Report (PSR) to Revenue on or before each pay date. You cannot do this manually with a spreadsheet. You need payroll software that is Revenue-compatible and can connect to ROS to fetch RPNs and submit PSRs. Revenue publishes a list of approved payroll software providers on their website.

When choosing software, consider whether it handles payslip generation, PRSI class selection, and year-end P60 equivalent reporting. Some cloud-based options are low-cost and well-suited to businesses with one or two employees. If you're not comfortable running payroll yourself, outsourcing it to an accountant or payroll bureau is a legitimate option and often cheaper than the time you'd spend doing it incorrectly. Either way, the employer remains legally responsible for the accuracy of submissions.

Step 5: Know Your Ongoing Obligations

Registering and running your first payroll is just the start. As an employer, you have ongoing obligations every pay period and at year end. Each pay period: fetch updated RPNs, run payroll, submit the PSR on or before pay date, pay Revenue what you've deducted plus employer PRSI. At year end: Revenue's PAYE Modernisation system largely automates the old P35 process, but you should reconcile your payroll records and ensure all submissions match what you've paid.

Beyond Revenue, you have obligations under employment law. These include keeping records of hours worked, holidays taken, and wages paid for a minimum period set out in employment legislation. You must also register with the Workplace Relations Commission if you employ staff, and you're required to display certain employment rights notices in the workplace. Citizens Information and the WRC website are good starting points for the non-tax side of being an employer.

Next steps

If you're getting ready to hire your first employee and want to make sure everything is set up correctly from day one, we can help. From employer registration to payroll setup and ongoing compliance, ARAN Accounting Solutions works with small businesses and sole traders across Limerick and beyond. Get in touch and we'll make sure you start on the right foot.

This article is general information, not tax advice. Your situation may be different. Talk to a qualified accountant before making decisions based on this.

Hiring Your First Employee in Ireland: Tax Checklist