16/06/2026
Payroll doesn’t have to be complicated. Here’s a step-by-step guide to get it right every time. Save this for your next payday.
Payroll is simply the process of calculating the total amount every employee should be paid monthly, including salary, allowances, and deductions.
Step 1: Gather Employee Info
Before you start, collect each employee’s details:
Full name & position
Salary or hourly rate
Tax ID
Pension & NHF details
Step 2: Calculate Gross Pay
Gross pay = Basic Salary + Allowances (transport, housing, feeding, etc.)
👉 This is the total amount before any deductions.
Step 3: Apply Statutory Deductions
Now subtract what must go to the government and other bodies:
PAYE (Pay-As-You-Earn) — personal income tax based on salary level.
Pension (8% employee + 10% employer) — goes to the employee’s pension fund.
NHF (2.5%) — National Housing Fund contribution.
Step 4: Compute Net Pay
Net Pay = Gross Pay − (PAYE + Pension + NHF + other deductions)
✅ This is what the employee actually takes home.
Step 4: Remittances
Don’t stop at paying your staff — you must remit deductions to the right authorities:
PAYE is remitted to the State Internal Revenue Service (e.g., Enugu IRS)
Pension Employee’s remitted to the Pension Fund Administrator (PFA)
NHS remitted to Federal Mortgage Bank
Additional tips to ensure compliance include:
* Maintain a payroll register showing all payments and remittances. It helps during audits and tax clearance.
* Monthly PAYE returns must be filed with your state IRS.
Annual returns (Form H1) are due by 31st January every year.
Payroll isn’t just about paying salaries it’s about staying compliant and building trust with your employees and the government.
Tax Mate Hub helps startups handle payroll and tax compliance without stress.
DM us if you want your payroll system set up correctly from day one.
