If you are running a small business in Australia, there are two ways of managing your payroll;
- Manage it on your own
- Outsource your payroll function to an external agency
But first things first. What is a small business in Australia?
According to Fair Work Australia, a small business enterprise employs 15 or fewer number of people. The Australia Bureau of Statistics, however, considers all businesses that employ 20 or fewer people as a small business. This understanding is important for tax purposes. You can manage your small business payroll through these 5-easy steps.
Choose a full-service payroll provider
If you aren’t certain how to handle this process on your own, hire a company that has expertise in payroll management. Companies like Employment Innovations can do the A-Z work of payroll processing. They will take down all the records of all your existing and new employees, their salary structures, tax liabilities, etc.
At the time of implementing your payroll software check whether it is compliant with the tax authorities. Ensure that all the required information is in place before you begin implementing your payroll tool. Some critical pieces of information are- Employment Identification Number, Tax Liability, etc. This step is important to avoid any future penalties slapped by the tax authorities. If you aren’t sure about the compliances, visit the website of the Australian Tax Office.
Deposit all the taxes of your employees within deadlines. Failure to do so might invite penalties or prosecution from tax authorities. Big companies can keep track of their deadlines easily, but small businesses may find this activity challenging. You can devise a system which tracks all the dates and deadlines and makes your tax compliance more manageable.
Categorize your employees correctly
It is important to identify your employees correctly. Some of them may be your direct employees, while others may be outsourced or independent contractors. In the former case, you’ll have to pay their taxes and record them on the payrolls. Independent contractors need to take care of their taxes on their own. Please note that employee categorization may differ from state to state. Check the local laws and regulations so that you are on the right side of the law.
Setting a budget
Your payroll activity shouldn’t cost a bomb. It must be affordable and justify your business costs. Set up a budget for your payroll management activity and stick to it.
Review all the information
Once a while, check all the information that is going into your payroll. If you aren’t careful, your payroll administrator might put in the wrong data, and this may prove to be costly for you. You may end up paying 100’s of dollars as penalties. You can avoid these avoidable mistakes by asking all your employees to provide their latest information like tax id, address, age, etc. There are some additional things you need to take care while planning your payroll.
For example, what is the software your provider will use? Is he using a cloud platform or something internal? Is the data secured from viruses and other attacks? How accurate is the data that’s being churned out by your payroll provider? Is your payroll platform scalable? Can it be customized further? Can you add new features to your payroll software?
These are some of the questions you need to ask before you install your payroll platform. Installing the right payroll system is critical for your business growth. We hope this article sets you off in the right direction.