No matter what type of business you operate, payroll is an essential process that you’ll need to stay on top of. Making sure your staff are paid on time is critical if you want to cultivate a happy workforce and meet your legal obligations. However, payroll management can be tricky, particularly for small businesses.
If you’re not sure where to start or what payroll accounting means for your firm, take a look at these key issues now:
- How Many People Do You Employ?
The number of employees you have impacts on your payroll practices, so it’s important to identify how many of your staff should be paid in this way. If you use freelancers or subcontractors, for example, they’re not classified as employees, so they won’t be on your payroll. However, both part-time and full-time employees will be. Determining exactly who should be paid via your payroll and getting their information is the first step in setting up a streamlined process, so be sure to request up-to-date details from staff when creating your payroll.
- Registering for PAYG Withholding
Most employers in Australia choose to register for Pay-As-You-Go (PAYG) withholding. This essentially means that you will withhold some of the payee’s wages every month and pay it to the Australian Taxation Office (ATO) instead.
- Dealing with Superannuation
If your employees are eligible, you’ll need to pay superannuation premiums on their behalf. The amount owed is subject to change, so be mindful of what the current rate is. Typically, superannuation is paid quarterly, and you may need to choose a default fund for employees if they don’t want to make this decision themselves.
- Making Payroll Deductions
When you pay your employees, you don’t simply transfer their basic salary into their bank accounts. Instead, you’ll need to make a series of deductions first. If you’re registered for PAYG withholding, you’ll need to deduct the appropriate amount of income tax, for example. Similarly, if the employee is making contributions to their superannuation fund, these will need to be deducted.
In addition to this, deductions may need to be made for contributions to employee savings funds, taxes on employee benefits, child maintenance, and/or wage garnishments.
- Reporting to the ATO
Single Touch Payroll (STP) is a very efficient reporting method. Every time you pay your employees, you’ll use STP-enabled software to submit the relevant details to the ATP.
This allows you to submit up to date records and, once set up, simplifies the reporting process. However, you will need to register for STP before you can begin using it.
Outsourcing Your Payroll Accounting
As you can see, there are many aspects to payroll accounting, even for small businesses. With potentially serious sanctions for non-compliance, it’s vital to implement accurate payroll practices from the get-go. Furthermore, the right payroll methods will help you to reduce your company’s tax liabilities and streamline your processes.
Outsourcing your payroll to a reputable, professional firm minimizes the burden on your business and gives you complete peace of mind. To learn more about our payroll services, contact RMT Bookkeeping now on 0420 902 119.