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 capacity to grow your team.
One of the most common challenges small-business owners face with expanding your team is navigating employer obligations when it comes to payroll. Here are some tips to help managing payroll as a small-business owner/employer.
Explore your employment types and your options
Before hiring, it is important to consider what your business needs to succeed, and what it can afford. Look at historical data, as well as your budget and forecast to determine what is feasible. If you are about to enter a busy period and predict it will quieten down and return to normal again, a casual or contract role might suit you better. On the other hand, if your data shows you that the work and sales are consistent and you are struggling to find time in the day to do it all, then a full-time role may be good for you.
Knowing your employment types and the obligations associated with them, such as award rates (which vary by sector, experience and whether the employee is taking an apprenticeship or other scheme), sick leave and holiday pay, is essential before you start the hiring process.
Look to cloud-based tools to streamline your payroll
Apart 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 tax obligations with the ATO. For example, PAYG withholding is where your employer automatically withholds a portion of your gross wage or salary for tax purposes. PAYG withholding must be done 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 is advantageous to employers as it frees up a lot of the manual data entry that was once required.
Most affordable accounting and bookkeeping service providers (e.g. QuickBooks, Xero, and MYOB) provide payroll functionalities, and 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 time to understand and comply with superannuation requirements
Superannuation is compulsory and paid in addition to employees’ wages and salaries. The super guarantee (minimum amount you need to pay) increased from 10% to 10.5% on 1 July 2022. If you haven’t already done so, your payroll software must be updated in order to account for the change.
Cloud-based providers are useful 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.
Super needs to be paid quarterly – by 28 October (Q1), 28 January (Q2), 28 April (Q3) and 28 July (Q4) each year. If not, you will need to pay a super guarantee charge.
Need help with managing your payroll?
Hiring and then managing payroll and its associated legalities can be a little daunting, however, a tech-based solution is ideal for small-business owners navigating this process. It’s both user-friendly and affordable, meaning you can get more hours in your day for other business processes. If you require assistance with payroll management and compliance to legalities, contact us today.
