When running a business, owners most commonly depend on their basic understanding of business finances and accounting to reduce the risk of inaccurate business books, including payroll. Payroll is not only about issuing a paycheck to an employee, it involves paying employees on time, accounting for and reporting superannuation, tax, and any other deductions required.
Factors that Can Impact Payroll for Small Business
When it comes to payroll, every small business owner should be able to answer a few basic questions. These queries may have an impact on how a small business handles payroll. Payroll can be influenced by taxes, employment legislation, the employee, and the extent of their work role. You can leave the burden of payroll management to the bookkeepers of Melbourne.
It is critical to consider:
• Whether the job is casual, part-time, temporary, contractual, or permanent.
• Whether the people hired are independent contractors or employees.
• What is the payment schedule [daily, weekly, bi-weekly, monthly]?
• How to ensure proper record keeping and tracking of employee labour and pay.
• Whether or not wage standards and other employment law entitlements are met.
• Tax and superannuation obligations.
The federal government receives the income tax from citizens and as employment income is the most common income, governments have set up tax rates to receive income taxes on time. However, they can’t be done without managing the process called payroll deduction. Small business bookkeepers can better manage payroll processing on your behalf.
Setting Up Payroll Withholding
• Overview of Payroll Withholding Tax
Payroll withholding tax indicates the amount of tax withheld from an employee’s salary by an employer, which in turn remits this amount on behalf of an employee.
• How does Payroll Withholding Tax Work?
This article will exclusively cover payroll for Australian businesses. Payroll withholding tax is collected through the Pay As You Go (PAYG) system in Australia. Simply put, if you’re an employer, it’s your responsibility to calculate how much tax your employees owe, deduct it from their pay, and report it to the Australian Taxation Office (ATO). You do this every time you pay your employees, and the procedure is the same for both salaried and hourly workers.
• Providing Payroll Withholding to the ATO
You have to register for PAYG withholding if your company needs to withhold payments from employees before you make any payments. You need to file a PAYG withholding annual report for all payments not reported and finalised via STP at the end of each financial year. Moreover, you can also ask about the whole process from bookkeepers for small businesses.
Set Up Employee Payroll Checklist
• Register for PAYG Withholding
You need to register for PAYG withholding before making any payment. You can do this at the time you register your business. If you have ABN, you can register for PAYG withholding with a BAS agent or small business accountant.
• Request the TFN of Employees
All employees need to complete a TFN declaration form when they start employment.
• Request superannuation details of the employees
You need to give superannuation standard choice forms to employees. This form informs the employee of your default fund for superannuation contributions and allows the employee to select their own preference.
• Request bank details of the employees
Make sure to collect the bank details of your employees for electric payments of their wages. You can also split payments across several bank accounts if the employee wants.
• Set up your payroll software
You’re ready to set up your company payroll in your favourite payroll software now that you’ve covered the fundamentals. There, you may be asked to provide your ABN, business name and address, as well as your name and contact information. You’ll need to fill out some common payroll information, such as standard working hours, how frequently you pay your staff, and the industry you’re in. Payroll software includes Single Touch Payroll to help you be ATO and PAYG compliant.
Now, you know what you need when setting up payroll for your small business. You can also seek help from professional bookkeepers to help you set up payroll. Moreover, you can contact Reliable Bookkeeping Services provider to seek help regarding payroll and bookkeeping solutions.