What's the Cheapest Way to Do Payroll for My First Employee?

Short answer: The cheapest reliable path is usually simple payroll software plus a tight monthly checklist, with one hour of accountant review per quarter until you grow. Ultra-cheap approaches fail when one wrong transfer or one missed filing costs more than a year of software.

Rank costs honestly

Direct fees

Subscriptions, per-run charges, and bank fees.

Time cost

Your hours preparing, approving, and fixing issues. Multiply hours by what your time is worth in sales or product work.

Risk cost

Penalties, re-runs, staff churn from late pay, and emergency consultant fees.

The cheapest headline tool is not cheapest if it burns your weekends.

Minimum viable payroll stack

For a first hire, you often need only:

• A single source of truth for gross pay, bonuses, and deductions.
• Verified bank details and a repeatable approval step.
• Stored pay records you can export for finance and for the employee.

Spreadsheets can work at the tiniest stage, but add version control and backup discipline.

Where to spend first

Spend first on verification (correct account names and amounts) and calendar (never miss pay day). Fancy analytics can wait.

Free or low-cost tactics that actually help

• Write a one-page payroll SOP: who updates changes, who approves, who clicks send.
• Align pay day with your largest predictable inflows to reduce overdraft stress.
• Keep WhatsApp for human chat, not for authoritative payroll numbers. Numbers belong in email or your system.

When to upgrade from "cheapest"

Upgrade when:

• You add a second employee with different terms.
• You introduce commissions or irregular bonuses.
• You hire a remote worker in another region with different expectations.

Questions before you buy anything

• Can I export my data if I switch tools?
• Does pricing scale linearly with headcount?
• Is support reachable during Nigerian business hours when pay day breaks?