Are you confused about where to start when it is a matter of payroll? The blog will share what you need to do payroll. Setting up payroll correctly is absolutely vital for making sure of accurate payroll calculations and compliance with state, federal, and local laws. In this ever-evolving business world, taking on payroll management can seem to be a daunting task. In this blog, you’ll come to know how to process payroll.
How to Do Payroll for Your Business?
Take a look at the following steps to do payroll:
• Knowledge of Australian Payroll Legislation
If you want to do payroll yourself, then you need to have basic knowledge regarding Australian payroll laws, including:
◦ The Fair Work Act 2009
◦ PAYG withholding tax system
◦ Superannuation Guarantee contributions
After this, you must have knowledge regarding minimum age, leave entitlements, overtime, and tax withholdings. Keep yourself up-to-date with the ATO website, where you’ll get the latest information on new and current Australian payroll laws. ATO provides details about superannuation guarantee contributions, the PAYG withholding tax system, and other tax-related matters.
• Registration for Tax and Superannuation System
Bookkeepers in Melbourne can help you with payroll processing. Next, register your company for PAYG withholding online with the ATO. The processing of this often takes a few days. It may take up to 28 days to receive your PAYG withholding registration confirmation, though. Additionally, you must decide on a default superannuation fund for your staff members.
The registration procedure usually doesn’t take longer than a few days once you’ve done your research and selected a high-performing fund. In order to make super payments, you must first register with the Small Business Superannuation Clearing House (SBSCH).
Although their employees may have selected separate super funds, the ATO offers this option to enable small firms to pay their super contributions in a single transaction to a single place. The funds are subsequently allocated by the SBSCH to each employee’s selected fund.
• Collecting Employee Details
To set up payroll, it is crucial to gather information from your employees, including their bank account details, tax file number, and chosen superannuation fund. In case the employee doesn’t have a chosen superannuation fund, you need to contribute to the “default” super fund you have selected. Moreover, by opting for accounting & bookkeeping services for your business, you can leave these types of tasks to bookkeepers or accountants.
• Choosing the Right Payroll System
You must select payroll software that is appropriate for your company’s requirements. Regardless of the software you use, it must adhere to Single Touch Payroll (STP). All employers must disclose salaries, taxes, and superannuation information to the ATO in real time each time they pay their employees under the STP mandated by the Australian government.
You should also pick a piece of software that can assist with payroll tax management. When your total earnings (including salary, benefits, and certain contractor payments) surpass a predetermined threshold established by the state or territory you reside in, you are required to pay payroll tax, a state-based tax. When you opt for bookkeeping services in Australia, then bookkeepers can better suggest what payroll software would be the best for your company.
• Processing Payroll
Depending on your established pay schedule, make calculations for each employee’s gross pay, minus necessary withholdings for tax and superannuation, and then release the net pay to their bank account. Using the tax scale, calculate tax withholdings. Many payroll software can automate these calculations depending on the data you enter for each worker. Moreover, accuracy can help you file the right tax return. For this, you can contact a tax accountant. If you want to hire an accountant near your area, you can search for ‘accountant near me’.
• Keeping Records Accurately and Reporting to the ATO
Lastly, maintain detailed payroll records as needed by the law, including:
◦ Details of each employee like name, date of birth, address, and employment start date.
◦ Employment terms such as part-time, full-time, or casual.
◦ Salary paid for each pay period and year-to-date.
◦ Tax amounts withheld from each pay.
◦ Every detail of superannuation contributions is made.
◦ Leave accruals and usage.
◦ Overtime hours and payment.
◦ Any agreements or contracts that show pay rates.
◦ Records of any allowances, bonuses, deductions, or reimbursements.
◦ Tax File Number declarations or withholding declarations copies.
As a business owner, it might be difficult for you to do payroll on your own, right? Thus, it is recommended to seek help from a professional bookkeeper to help you manage payroll processing. For this, you can also ask a Reliable Bookkeeping Services provider to help you with payroll management.