Top tips for managing payroll as an employer

STP, payroll system, reporting

We’ve just entered a new financial year, so chances are you might be forward planning for 2022/23, and have identified that there’s either capacity to hire your first employee, or grow your team. Great news!

One of the most common challenges I find small-business owners face with this, though, is navigating their employer obligations when it comes to payroll.

First things first: explore your employment types, and your options

Before hiring, it’s important to consider what the business needs to succeed – and, ultimately, can afford. I highly recommend looking at historical data, as well as your budget and forecast to determine what’s feasible. If you’re about to enter a busy period, yet predict it will quieten down or return to normal levels again, a casual or contract role might be best. On the flip side, if your data is showing you that the work and sales are consistent, and you’re struggling to find time in the day to do it all, then a full-timer may be the way to go.

Ultimately, knowing your employment types, and the obligations that are associated with them – such as award rates (which vary by sector, experience, and whether the employee is taking part in an apprenticeship or other scheme), sick leave and holiday pay, is essential before you commence the hiring process.

Look to cloud-based tools to streamline your payroll

Aside from ensuring you’re paying award rates at a minimum and submitting employees’ payments on time, there are a number of elements to consider when it comes to your obligations with the Australian Tax Office (ATO). You might remember this as an employee, where your employer automatically withheld a portion of your gross wage or salary for tax purposes. This is known as PAYG withholding, and is something you must do for all employees. Furthermore, it needs to be reported to the ATO with every pay cycle, and year end data has to be submitted with each financial year (the cut-off date being 14th July), so that employees can lodge their personal tax returns.

The government introduced Single Touch Payroll (STP) in 2019, which is where payment details are lodged via digital means. It’s a positive for employers, as it frees up a lot of the manual data entry that was once required.

Most affordable accounting and bookkeeping service providers – think QuickBooks, Xero, and MYOB – provide payroll functionalities, and they are also integrated with STP. Your cloud-based payroll platform can be connected to the ATO portal, which means you can generate and send reports while preparing employees’ payments, saving you a lot of time in the process.

Take the time to understand – and ensure compliance with – superannuation requirements

Superannuation is compulsory, and paid in addition to employees’ wages and salaries. Importantly, the super guarantee – the minimum amount you need to pay – increased from 10 per cent to 10.5 per cent on 1 July 2022, so if you haven’t already, you must update your payroll software to account for this change.

Once again, cloud-based providers are the way to go here, as you can configure your payroll and STP so that superannuation is automatically included. Make sure you provide new employees with a superannuation standard choice form, where they provide their chosen fund’s details.

You also need to select a default super fund for the business, where you pay employees if they don’t have a preferred fund, or a stapled super fund.

In terms of timings, super needs to be paid quarterly – by 28 October (Q1), 28 January (Q2), 28 April (Q3) and 28 July (Q4) each year – or you’ll need to pay a super guarantee charge.

Hiring, and then managing payroll and its associated legalities can be a little daunting, however, a tech-based approach is ultimately the ideal solution for small-business owners navigating this element of their operations. It’s both user-friendly and affordable, meaning you can get precious hours back in your day, while ensure compliance.