How to run payroll in Nigeria: a step-by-step monthly checklist

Payroll is only as good as the data behind it. Before you run your first month, make sure you have:

• Your company's tax registration with the State Internal Revenue Service, and a Tax ID for each employee
• Each employee's Pension Fund Administrator and RSA PIN
• NHF, NSITF, and ITF registrations where your business is in scope
• A clear salary structure for every employee: basic, housing, transport, and other allowances
• Verified bank account details for every employee
• Signed employment contracts that match what you are about to pay

Agree three dates and stick to them every month: the cut-off for changes, the approval deadline, and pay day. Anything that arrives after the cut-off goes into next month. This one habit removes most last-minute payroll stress.

Gather every change that affects pay before the cut-off, and check each one against a source document.

• New hires and their start dates (pro-rate partial months)
• Leavers and their final pay, including unused leave where your policy pays it
• Promotions, raises, and new allowances
• Unpaid leave and absence deductions
• Overtime, bonuses, and commissions
• Salary advance and loan repayments
• Bank detail changes, which should always be verified with the employee directly, because they are a common route for payroll fraud

For each employee, work out gross pay, then the statutory deductions: employee pension (8% of basic, housing, and transport), NHF (2.5% of basic where it applies), and PAYE under the Nigeria Tax Act 2025 bands. Then subtract any other deductions such as loan repayments to reach net pay. Don't forget the employer costs that sit on top of salary: employer pension (10%) and NSITF (1% of payroll).

Before anyone approves, compare this month with last month. Most errors show up as unexplained differences.

• Did headcount change, and does that match your hires and leavers?
• Has any employee's net pay moved by more than 10% without a known reason?
• Are there new or changed bank accounts?
• Is anyone being paid twice, or still being paid after leaving?

The person who prepares payroll should not be the person who approves it. Even in a small company, a simple maker-checker rule between HR and finance, or between finance and a director, catches mistakes and deters fraud. Record who approved and when.

Pay salaries through your bank's bulk payment service or a payment platform. Once the payments go through, reconcile what the bank actually paid against your approved payroll and follow up on any failed transfers straight away.

Give every employee a payslip showing gross pay, each deduction, and net pay. Clear payslips reduce questions to HR, and employees need them for loans, visas, and tenancy applications.

Deductions you have taken from employees are not yours to hold. Late remittance attracts penalties and interest. The usual timelines are:

• PAYE: to the State IRS, generally by the 10th of the following month
• Pension: to each employee's PFA, generally within 7 working days of paying salaries
• NHF: to the Federal Mortgage Bank of Nigeria, generally within one month
• NSITF and ITF: on their own schedules, where you are in scope

Keep a close pack for every month: the payroll register, the approvals, bank payment confirmations, and remittance receipts. When an auditor, a tax officer, or an employee asks a question two years from now, you'll have the answer in minutes.

Spreadsheets work for a very small team, but every step above is manual and nothing stops a formula error or an unapproved change.

Payroll software does the calculations, enforces the approval step, issues payslips, and keeps the audit trail for you. Your team still runs the process, but in a fraction of the time.

Managed payroll goes one step further: a payroll specialist prepares and checks the run with you each month, so you approve rather than build.

Both our plans give your team the whole checklist in one place: Nigerian statutory calculations, variance checks before approval, review and approval before anything is paid, payslips in the employee portal, and a statutory schedule and close pack every month. Workforce Pro adds the payroll wallet, so you fund once and pay every employee in one go.

If you would rather not run payroll yourself, our managed payroll service gives you a named payroll specialist who prepares payroll with you, validates changes before processing, coordinates approvals and funding, and reconciles every month. Book a consultation, or chat to us on WhatsApp, to see which fits your business.