Small business payroll might seem simple at first, but as your business grows, so does the complexity of the process. However, this complexity is a good sign – it means your business is expanding!
Understanding Small Business Payroll
When managing payroll, you need to consider various factors like income tax, superannuation, award rates, salary sacrificing, and more. While you can handle it yourself, outsourcing payroll services can save you time and money.
Key Responsibilities and Considerations:
- Hiring staff: Decide whether to hire employees or contractors.
- Record keeping: Maintain records of personal information, hours worked, and award rates.
- Payroll withholdings: Ensure compliance with superannuation guarantees, income tax, HECs repayments, and other requirements.
- Payroll software: Choose the right software to automate time tracking, meet compliance standards, and integrate with your accounting software.
- Payroll services: Consider outsourcing payroll to a trusted third party.
Payroll Compliance Requirements:
To operate a business in Australia, you must adhere to payroll regulations, including:
- National Employment Standards (NES): These standards cover flexible working arrangements, maximum hours, parental leave, annual leave, personal/carer’s leave, compassionate leave, and public holidays.
- Record keeping: Keep employee payroll records and payslips for at least seven years.
- Payslips: Provide payslips to employees to show wages and entitlements.
Payroll Withholding and Taxes:
- Income tax: Withhold income taxes from employee paychecks based on their earnings.
- Payroll tax: Pay a 4.75% or 4.95% payroll tax based on your business’s taxable wages.
- Superannuation: Withhold at least 10.5% of each employee’s gross income for superannuation.
Tips for Setting Up and Managing Payroll:
- Register your ABN and PAYG withholding.
- Collect employee information.
- Use single-touch payroll.
- Choose the right payroll software.
- Leverage payroll services.
Takeaway
As your small business grows, understanding and effectively managing payroll becomes crucial. By considering these factors and following compliance requirements, you can ensure accurate payroll processing and avoid potential issues. If you’re overwhelmed by the complexity of payroll, consider talking to us.
