Hiring my first employee — what do I need to set up for payroll?

Congratulations! Yes, you need to register as an employer with HMRC before your first payday — you can't register more than 2 months before you start paying her, but don't leave it to the last minute as your PAYE reference arrives by post. For PAYE itself, you'll report her pay to HMRC on or before each payday and give her payslips — you can absolutely do this yourself with payroll software (HMRC's Basic PAYE Tools is free and fine for one employee), though many small employers hand it to an accountant or payroll provider to save the hassle. Before she starts, you'll also need employer's liability insurance (a legal requirement), a written statement of her employment terms, and to check her right to work in the UK. Don't forget workplace pensions either — you'll need to assess her for auto-enrolment. It sounds like a lot, but GOV.UK's 'employ someone for the first time' step-by-step guide walks through it all.