UNDERSTANDING PAYROLL:

The Essential Guide for Australian
Businesses 2022

THE FUNCTION OF PAYROLL

PAYMENT REQUIREMENTS

COMPLIANCE & RISKS

PROCESSING PAYROLL

BENEFITS OF PAYROLL SOFTWARE

IN-HOUSE VS OUTSOURCED PAYROLL

PAYROLL HEALTH CHECKLIST

THE FUNCTION OF PAYROLL IN BUSINESS

What is payroll?

Why is payroll so important?

How is payroll calculated?

A benchmark for payroll expenses

How to make payroll easier?

EMPLOYEE PAYMENT REQUIREMENTS

Payment

Superannuation

Tax

Deductions

Workers Compensation

PROCESSING PAYROLL – STP REQUIREMENTS

COMPLIANCE & RISKS BUSINESSES SHOULD BE AWARE OF WITH PROCESSING PAYROLL

National Employment Standards

Legal Obligations

Compliances & Risks

Modern Awards

THE BENEFITS OF PAYROLL SOFTWARE

IN-HOUSE VS OUTSOURCED PAYROLL

PAYROLL HEALTH CHECKLIST

THE FUNCTION OF PAYROLL IN BUSINESS

What is payroll?

Why is payroll so important?

How is payroll calculated?

A benchmark for payroll expenses

How to make payroll easier?

EMPLOYEE PAYMENT REQUIREMENTS

Payment

Superannuation

Tax

Deductions

Workers Compensation

COMPLIANCE & RISKS BUSINESSES SHOULD BE AWARE OF WITH PROCESSING PAYROLL

National Employment Standards

Legal Obligations

Compliances & Risks

Modern Awards

PROCESSING PAYROLL – STP REQUIREMENTS

THE BENEFITS OF PAYROLL SOFTWARE

IN-HOUSE VS OUTSOURCED PAYROLL

PAYROLL HEALTH CHECKLIST

One of the most time-consuming and confusing aspects of running a business is managing payroll. Yet, in order for your business to run smoothly, you need to have a strong payroll function!

If your business and its employees are to thrive, can you be sure that your payroll is efficient, compliant and free from error?

Any problems with your payroll management can lower employee morale, tie up critical company resources and put your business at legal risk.

If your business is growing and your payroll function is becoming more complicated, then this guide will help answer the many questions you have and guide you through the intricacies of Australia’s payroll processes.

Section 1
THE FUNCTION OF PAYROLL IN BUSINESS

 

The primary function of a business’s payroll department is to ensure its employees are being paid accurately. This includes the recording and compensation of salaries, wages, bonuses and deductions.

Employers need to understand how payroll works. Firstly, because it’s a legal requirement for businesses to do so, and secondly, because your employees deserve to be compensated for the work they do.

Section 1
THE FUNCTION OF PAYROLL IN BUSINESS

The primary function of a business’s payroll department is to ensure its employees are being paid accurately. This includes the recording and compensation of salaries, wages, bonuses and deductions.

Employers need to understand how payroll works. Firstly, because it’s a legal requirement for businesses to do so, and secondly, because your employees deserve to be compensated for the work they do.

 

What is Payroll?

Payroll is the compensation a business must pay to its employees. It is often managed by the accounting or human resources (HR) department of a company. Yet increasingly, payroll is outsourced to payroll management firms to assist businesses in managing and recording their payroll more effectively.

In addition to a worker’s salary, payroll also includes keeping records of those payments and paying taxes on behalf of those employees.

Payroll is the compensation a business must pay to its employees. It is often managed by the accounting or human resources (HR) department of a company. Yet increasingly, payroll is outsourced to payroll management firms to assist businesses in managing and recording their payroll more effectively.

In addition to a worker’s salary, payroll also includes keeping records of those payments and paying taxes on behalf of those employees.

WHY IS PAYROLL SO IMPORTANT?

 

Legally, employers are required to pay employees correctly and on time. If payroll is late or if there are any errors, employees will start to question the company’s financial integrity. This can then lead to workers feeling insecure at work and thus underperforming and caring less for their job.

For businesses, the fallout of an inadequate payroll process can encompass everything from:

  • Poor employee morale
  • Negative reviews and feedback about their organization
  • Loss of brand value and integrity
  • Higher turnover rates

Around one in four employees will look for a new job after the first payroll mistake! Employees today are expecting security and stability. If their company isn’t delivering this, then they’re looking for work elsewhere.

Another important aspect of payroll is that it keeps your business compliant with state and government taxes. If mistakes are made, it can trigger a government audit resulting in big penalties and fines.

HOW IS PAYROLL CALCULATED?

 

Calculating payroll involves several steps. This can include:

  • Reviewing employee hourly schedules
  • Determining gross pay
  • Determining overtime
  • Determining deductions
  • Calculating net pay

Once an employee’s net pay is established, you can then pay them on their scheduled payday in the form of checks or direct deposits.

This can be a very time-consuming process as it must be performed meticulously to ensure there are no mistakes.

A BENCHMARK FOR PAYROLL EXPENSES

 

Payroll expenses vary across different industries and business sizes. According to the Australian Payroll Association’s Benchmarking Report, the nation’s average cost per payslip is $125.79, however this does fluctuate based on various factors.

Payroll expenses include employee wages, owner/management salaries, insurance, tax expenses, and the cost of employee benefits.

Payroll expenses make up one of the largest portions of business expenses, so for that reason, it’s important to calculate the true cost of your payroll to keep your wages under control.

One of the best ways to do this is to start with the industry standard. This is typically between 20% to 30% of gross revenue in payroll expenses. For those in the services industry, payroll can reach higher percentages as these industries see diminished costs in other areas.

Read more

A good way to calculate your payroll expenses is to first establish your business’s annual payroll-to-net-profit ratio. Simply divide annual payroll expenses by annual net profit and multiply this figure by 100 to reveal your ratio. If your percentage falls within the industry “safe zone” then focus on maintaining it.

Be careful about going over the industry standard. Doing so can have a negative ripple effect on the rest of your business. For example, if you own a restaurant, you want to keep payroll expenses under 30% given the added high cost of food. Going above that threshold will leave you with fewer resources to maintain business profitability.

A BENCHMARK FOR PAYROLL EXPENSES

 

Payroll expenses vary across different industries and business sizes. According to the Australian Payroll Association’s Benchmarking Report, the nation’s average cost per payslip is $125.79, however this does fluctuate based on various factors.

Payroll expenses include employee wages, owner/management salaries, insurance, tax expenses and the cost of employee benefits.

Payroll expenses make up one of the largest portions of business expenses, so for that reason, it’s important to calculate the true cost of your payroll to keep your wages under control.

One of the best ways to do this is to start with the industry standard. This is typically between 20% to 30% of gross revenue in payroll expenses. For those in the services industry, payroll can reach higher percentages as these industries see diminished costs in other areas.

A BENCHMARK FOR PAYROLL EXPENSES

 

Payroll expenses vary across different industries and business sizes. According to the Australian Payroll Association’s Benchmarking Report, the nation’s average cost per payslip is $125.79, however this does fluctuate based on various factors.

Payroll expenses include employee wages, owner/management salaries, insurance, tax expenses and the cost of employee benefits.

Payroll expenses make up one of the largest portions of business expenses, so for that reason, it’s important to calculate the true cost of your payroll to keep your wages under control.

One of the best ways to do this is to start with the industry standard. This is typically between 20% to 30% of gross revenue in payroll expenses. For those in the services industry, payroll can reach higher percentages as these industries see diminished costs in other areas.

Read more

A good way to calculate your payroll expenses is to first establish your business’s annual payroll-to-net-profit ratio. Simply divide annual payroll expenses by annual net profit and multiply this figure by 100 to reveal your ratio. If your percentage falls within the industry “safe zone” then focus on maintaining it.

Be careful about going over the industry standard. Doing so can have a negative ripple effect on the rest of your business. For example, if you own a restaurant, you want to keep payroll expenses under 30% given the added high cost of food. Going above that threshold will leave you with fewer resources to maintain business profitability.

HOW TO MAKE PAYROLL EASIER

 

There are many challenges when navigating payroll. This comes with a lot of pressure for businesses, often taking away valuable time from other important operations and obligations. On top of that, tax laws are always changing, and making errors or neglecting these obligations means that you’re on the line if anything were to go amiss.

To make payroll easier, here are the top tips that every payroll function should be implementing:

Create a payroll calendar

This will include when timesheets and leave must be approved, information such as when pay rate changes are submitted, the processing of payroll, along with the payment dates for all pay periods of the year.

Provide HR staff with payroll training

To improve the payroll management process, consider organising payroll training for HR staff. This will help encourage collaboration, reduce errors and get staff

Automate your payroll process

Manually processing payroll is time-consuming and prone to human error. Automating the payroll process simplifies everything from payment to calculating tax withholdings.

Keep records by pay period

Payroll software often generates custom reports, however, it’s still important to keep records that are compartmentalised to pay periods. This makes it easier to audit and provide employees with documents such as proof of employment slips.

Conduct regular audits

Businesses that use manual payroll processes are at high risk of human error and discrepancies. Even payroll software isn’t immune to mistakes. Regularly auditing your payroll can help you avoid any errors and ensure you are up to date and compliance with any legislative changes.

Outsource your payroll

One of the simplest tools to make payroll easier is to outsource. With automation and outsourcing, you can improve your time management, ensure accuracy and fulfill compliance requirements.

HOW TO MAKE PAYROLL EASIER

 

There are many challenges when navigating payroll. This comes with a lot of pressure for businesses, often taking away valuable time from other important operations and obligations. On top of that, tax laws are always changing, and making errors or neglecting these obligations means that you’re on the line if anything were to go amiss.

To make payroll easier, here are the top tips that every payroll function should be implementing:

Create a payroll calendar

This will include when timesheets and leave must be approved, information such as when pay rate changes are submitted, the processing of payroll, along with the payment dates for all pay periods of the year.

Provide HR staff with payroll training

To improve the payroll management process, consider organising payroll training for HR staff. This will help encourage collaboration, reduce errors and get staff

Automate your payroll process

Manually processing payroll is time-consuming and prone to human error. Automating the payroll process simplifies everything from payment to calculating tax withholdings.

Keep records by pay period

Payroll software often generates custom reports, however, it’s still important to keep records that are compartmentalised to pay periods. This makes it easier to audit and provide employees with documents such as proof of employment slips.

Conduct regular audits

Businesses that use manual payroll processes are at high risk of human error and discrepancies. Even payroll software isn’t immune to mistakes. Regularly auditing your payroll can help you avoid any errors and ensure you are up to date and compliance with any legislative changes.

Outsource your payroll

One of the simplest tools to make payroll easier is to outsource. With automation and outsourcing, you can improve your time management, ensure accuracy and fulfill compliance requirements.

Section 2
EMPLOYEE PAYMENT REQUIREMENTS

 

In Australia, employers who engage employees under Commonwealth workplace laws are required to keep and maintain employee records and deliver accurate payslips.

These record-keeping requirements are designed to ensure that all employees receive their correct wages and entitlements.

Section 2
EMPLOYEE PAYMENT REQUIREMENTS

In Australia, employers who engage employees under Commonwealth workplace laws are required to keep and maintain employee records and deliver accurate payslips.

These record-keeping requirements are designed to ensure that all employees receive their correct wages and entitlements.

 

To ensure your payroll is correctly managed, you should have records of:

  • Payments made to employees
  • Records of super contributions
  • Records of the super fund choice of your employees
  • Records of pay as you go withholding (PAYGW)
  • Records of fringe benefits

These records must be kept for five years – starting when you obtained or prepared the records.

Payment

 

As an employer, it’s crucial to understand your obligations when it comes to employee entitlements. This includes wages, awards, leave and allowances.

Employers need to pay employees for the work they do. Payroll includes keeping records of pay rates and conditions so that employees are getting paid the correct amount for their occupation and working arrangement.

There are a number of things to keep in mind:

  • Payment of wagesThe Fair Work Act 2009 states that employers must pay employees at least monthly for the work they do. This allows employers to choose whether to pay their employees weekly, fortnightly or monthly. Whichever frequency you choose, it should be stated in an employee’s contract of employment that the employer has the right to choose the frequency of payments, in case it is to be altered in the future.
  • PayslipsEmployees need to be given a payslip within one working day of being paid. Payslips can be given electronically or as a hard copy. Penalties apply for any payslips that neglect to include certain details including the employee’s contact details, ABN (if applicable) and pay period. False or misleading information will result in penalties. For example, miscalculating pay or underpaying an employee can mean significant fines for employers. Frequent noncompliance will often result in poor company culture and a poor reputation among workers, customers and stakeholders.
  • Record-keepingEmployers must keep accurate and up-to-date records. Employee payment records must also remain confidential.
  • Income statementsIncome statements need to include payroll information required by the Australian Tax Office (ATO). Most businesses now are covered by Single Touch Payroll, helping employers streamline their reporting process to the ATO.

Annual Salary Calculator

SUPERANNUATION

Superannuation is the money you pay to fund your employee’s retirement.

As an employer, your superannuation obligations include:

  • Requesting Stapled Super information from the ATO when your new employees do not provide superannuation fund details.
  • Giving your employees a choice of super fund or advising employees of your nominated super fund
  • Give your employee’s Tax File Number (TFN) to their chosen super fund within 14 days of receiving their TFN declaration form
  • Pay super contributions for eligible employees four times a year, by the quarterly due dates
  • Pay the Superannuation Guarantee (SG) to eligible employees
  • Pay and report super electronically, ensuring you meet SuperStream requirements
  • Keep records of super contribution payments along with evidence that you offered a choice of a super fund to eligible employees

These obligations can become more complex depending on the salary packages offered by an employer. By utilising a smart payroll software, this can prevent miscalculations with processing superannuation.

SUPERANNUATION

 

Superannuation is the money you pay to fund your employee’s retirement.

As an employer, your superannuation obligations include:

  • Requesting Stapled Super information from the ATO when your new employees do not provide superannuation fund details.
  • Giving your employees a choice of super fund or advising employees of your nominated super fund
  • Give your employee’s Tax File Number (TFN) to their chosen super fund within 14 days of receiving their TFN declaration form
  • Pay super contributions for eligible employees four times a year, by the quarterly due dates
  • Pay the Superannuation Guarantee (SG) to eligible employees
  • Pay and report super electronically, ensuring you meet SuperStream requirements
  • Keep records of super contribution payments along with evidence that you offered a choice of a super fund to eligible employees

These obligations can become more complex depending on the salary packages offered by an employer. By utilising a smart payroll software, this can prevent miscalculations with processing superannuation.

TAX

 

Tax is often updated when award wages are updated. However, it’s easy for employers to be caught out.

Payroll tax is paid to each state and territory individually. Since all these zones have their own thresholds and payroll tax legislation, rates and exemptions as well as remittance schedules, it can be easy to make mistakes.

Australian State and Territory Revenue Officers regularly conduct audits and investigations to ensure all liable employers remain compliant with their state/territory payroll tax laws.

Penalties are imposed if employers fail to register and if they provide false or misleading information in their submitted payroll tax returns.

Read more

Payroll taxes include PAYG Withholding, Superannuation, Payroll Tax (tax on the wages paid to employees) and Fringe Benefits Tax.

Not all businesses have to pay payroll tax. You only have to pay when your total Australian wages are over the tax-free threshold for your relevant state or territory.

Since COVID-19, a number of payroll tax relief measures have been introduced to each state/territory to help alleviate the financial impacts of coronavirus on businesses.

DEDUCTIONS

 

Payroll deductions are payments you make out of an employee’s earnings on their behalf, for the purpose of paying taxes and benefits such as health insurance.

Tax deductions related to payroll include:

  • The salaries and wages you pay to employees 
  • Super contributions you make on time to your employee’s chosen super fund 
  • Training costs 
  • Staff amenities 
  • Small gifts or one-off rewards totaling less than $200 
  • Workers compensation 

An employer cannot deduct money if it will benefit the employer directly or indirectly or if the employee is under 18 years of age and their parent/guardian hasn’t agreed in writing.

WORKERS COMPENSATION

 

Workers compensation is a form of insurance payment for employees who have become injured while at work or who have developed an illness due to their work.

Workers compensation is a compulsory statutory form of insurance for all Australian businesses.

Workers compensation includes payments to cover employees wages while they’re not fit to work and to cover their medical expenses and rehabilitation.

Workers compensation requirements do differ across different states, so it’s important to contact the worker’s compensation regulator in your state or territory.

WORKERS COMPENSATION

Workers compensation is a form of insurance payment for employees who have become injured while at work or who have developed an illness due to their work.

Workers compensation is a compulsory statutory form of insurance for all Australian businesses.

Workers compensation includes payments to cover employees wages while they’re not fit to work and to cover their medical expenses and rehabilitation.

Workers compensation requirements do differ across different states, so it’s important to contact the worker’s compensation regulator in your state or territory.

Section 3
COMPLIANCE & RISKS BUSINESSES SHOULD BE AWARE OF WITH PROCESSING PAYROLL

 

One of the hardest things for businesses to navigate is the increasing payroll complexities related to the ever-changing standards to industry regulation.

Knowing the risks of payroll and being aware of compliance regulations will save your business from potential legal issues and negative fallout.

Section 3
COMPLIANCE & RISKS BUSINESSES SHOULD BE AWARE OF WITH PROCESSING PAYROLL

One of the hardest things for businesses to navigate is the increasing payroll complexities related to the ever-changing standards to industry regulation.

Knowing the risks of payroll and being aware of compliance regulations will save your business from potential legal issues and negative fallout.

 

There have been several cases highlighted in the media of businesses underpaying their staff or failing to meet industry standards. The fallout of which has meant their brand and reputation have been tarnished and their growth significantly stunted as employees, customers and stakeholders revert away from their services.

To mitigate these risks and save your business from potentially costly payroll pitfalls, here are some of the things employers should be aware of when processing payroll.

National Employment Standards

 

The National Employment Standards (NES) are the minimum standards of employment in Australia, covering the following:

  • Maximum weekly hours of work
  • Requests for flexible working arrangements
  • Parental leave and related entitlements
  • Annual leave
  • Personal/Carer’s leave, compassionate leave, family and domestic violence leave
  • Community service leave
  • Long service leave
  • Public holidays
  • Notice of termination and redundancy pay
  • Provision of a Fair Work Information Statement and Casual Employment Information Statement
  • Casual conversion

 

The NES applies to all employees covered by the national workplace relations system. However, casual employees are only entitled to some of the NES entitlements such as unpaid carer’s leave.

Penalties apply to businesses that breach these workplace laws. This includes businesses that fail to keep employee records and issue payslips in accordance with the Fair Work Amendment Act.

LEGAL OBLIGATIONS

 

There are legislative obligations impacting payroll in Australia. Employers need to be aware of these obligations and ensure their payroll team is equipped with the right knowledge and resources to meet them.

As an employer, you must be aware of the payroll liabilities you’re responsible for. Some of the top legal responsibilities that employers have related to payroll include employee wages, payroll taxes, payroll service costs and other deductions that may be withheld from employee wages.

Since these liabilities include money that must be paid at a future date, it can be very easy to overlook them.

Read more

As with any liability, you are required to pay your payroll liabilities to the appropriate recipients. To avoid overlooking your liabilities or missing deadlines to pay liabilities, you should keep track of them. This can be done either with a reliable software system, with payroll accounting or with payroll outsourcing. That way, you will be able to create a budget taking into account your liabilities, know your deposit schedule, keep accurate records and streamline the process so that all legislative requirements are being addressed.

If businesses fail to meet or adhere to their main obligations, they could end up running out of funds and be faced with a court order and serious fines.

LEGAL OBLIGATIONS

 

There are legislative obligations impacting payroll in Australia. Employers need to be aware of these obligations and ensure their payroll team is equipped with the right knowledge and resources to meet them.

As an employer, you must be aware of the payroll liabilities you’re responsible for. Some of the top legal responsibilities that employers have related to payroll include employee wages, payroll taxes, payroll service costs and other deductions that may be withheld from employee wages.

Since these liabilities include money that must be paid at a future date, it can be very easy to overlook them.

There are legislative obligations impacting payroll in Australia. Employers need to be aware of these obligations and ensure their payroll team is equipped with the right knowledge and resources to meet them.

As an employer, you must be aware of the payroll liabilities you’re responsible for. Some of the top legal responsibilities that employers have related to payroll include employee wages, payroll taxes, payroll service costs and other deductions that may be withheld from employee wages.

Since these liabilities include money that must be paid at a future date, it can be very easy to overlook them.

Read more
As with any liability, you are required to pay your payroll liabilities to the appropriate recipients. To avoid overlooking your liabilities or missing deadlines to pay liabilities, you should keep track of them. This can be done either with a reliable software system, with payroll accounting or with payroll outsourcing. That way, you will be able to create a budget taking into account your liabilities, know your deposit schedule, keep accurate records and streamline the process so that all legislative requirements are being addressed.

If businesses fail to meet or adhere to their main obligations, they could end up running out of funds and be faced with a court order and serious fines.

COMPLIANCES & RISKS

 

Navigating payroll laws and following industry practices can be challenging – whether you’re hiring your first employee or your 500th! One of the things employers struggle to get their heads around is that payroll isn’t strictly about paying employees.

In Australia, payroll compliance laws cover everything from wages to hiring & firing, entitlements, bonuses and work arrangements just to name a few.

To help you become aware of all payroll compliances, here is our 10 point compliance checklist that ensures a compliant and efficient payroll.

Your obligation as an employer is to keep accurate records and provide payslips to employees. Failing to comply can have negative financial and reputational consequences for your business.

Read more

For this reason, having the right payroll software with reporting and tracking functions is crucial. It’s also worth training staff if you’re relying on a single payroll manager to oversee everything. This is especially helpful in instances where your dedicated payroll manager falls sick or retires and there isn’t anyone else who can stand in and meet reporting requirements.

Outsourcing to a managed payroll provider is also a key way to remove risk and manage your obligations to ensure compliance is met and guaranteed on every pay run.

COMPLIANCES & RISKS

 

Navigating payroll laws and following industry practices can be challenging – whether you’re hiring your first employee or your 500th! One of the things employers struggle to get their heads around is that payroll isn’t strictly about paying employees.

In Australia, payroll compliance laws cover everything from wages to hiring & firing, entitlements, bonuses and work arrangements just to name a few.

To help you become aware of all payroll compliances, here is our 10 point compliance checklist that ensures a compliant and efficient payroll.

Your obligation as an employer is to keep accurate records and provide payslips to employees. Failing to comply can have negative financial and reputational consequences for your business.

Read more

For this reason, having the right payroll software with reporting and tracking functions is crucial. It’s also worth training staff if you’re relying on a single payroll manager to oversee everything. This is especially helpful in instances where your dedicated payroll manager falls sick or retires and there isn’t anyone else who can stand in and meet reporting requirements.

Outsourcing to a managed payroll provider is also a key way to remove risk and manage your obligations to ensure compliance is met and guaranteed on every pay run.

MODERN AWARDS

 

It’s important to keep up with ongoing changes within modern awards.

A modern award is a document that sets the minimum terms and conditions of employment on top of the National Employment Standards (NES) and the Fair Work legislation.

Since coming into effect in 2010, modern awards provide entitlements including pay, hours of work, rosters, allowances, breaks, penalty rates and overtime.

Modern awards apply to all employees covered by the national workplace relations system.

Failing to understand the requirements of the modern award can lead to serious ramifications including:

Infringement notices

On the spot fines occur in cases where a payslip isn’t provided

Court proceedings and penalties

Court orders can be made against an employer if there has been a breach of workplace laws

Damage to reputation

Negative media attention and bad reviews can negatively affect financial and business growth

Backpay to underpaid employees

If the Fair Work Ombudsman is notified of an employee/s being underpaid, they can order businesses to back pay all unpaid employee entitlements – even if the employee has since terminated their employment

Poor work culture

Falling to award employees can create a negative working environment and promote low morale among workers. This often results in a high staff turnover rate leading to further financial strain

Infringement notices

On the spot fines occur in cases where a payslip isn’t provided

Court proceedings and penalties

Court orders can be made against an employer if there has been a breach of workplace laws

Damage to reputation

Negative media attention and bad reviews can negatively affect financial and business growth

Backpay to underpaid employees

If the Fair Work Ombudsman is notified of an employee/s being underpaid, they can order businesses to back pay all unpaid employee entitlements – even if the employee has since terminated their employment

Poor work culture

Falling to award employees can create a negative working environment and promote low morale among workers. This often results in a high staff turnover rate leading to further financial strain

While determining modern awards and related classifications can be confusing and time-consuming, this legislature must be reviewed and adhered to.

Download Industry
Award Summaries

Section 4
PROCESSING PAYROLL – STP REQUIREMENTS

 

Processing payroll requires extensive and meticulous thought. The scope for possible human error is large as the process demands time, considerable amounts of data and a thorough knowledge of different legal requirements.

Careful consideration is required when addressing payroll to ensure your business is meeting its obligations.

One of these considerations includes Single Touch Payroll (STP) which will become mandatory for every business by the end of 2022.

Section 4
PROCESSING PAYROLL – STP REQUIREMENTS

 

Processing payroll requires extensive and meticulous thought. The scope for possible human error is large as the process demands time, considerable amounts of data and a thorough knowledge of different legal requirements.

Careful consideration is required when addressing payroll to ensure your business is meeting its obligations.

One of these considerations includes Single Touch Payroll (STP) which will become mandatory for every business by the end of 2022.

Single Touch Payroll

 

Single Touch Payroll (STP) is an initiative set out by the Australian Government to make reporting easier for businesses.

STP started in 2018, with businesses of more than 20 employees reporting employee payroll information to the ATO using STP-enabled software.

In 2022, this initiative will expand to include all businesses/employers. The expansion, known as STP Phase 2 or STP2, will allow employers to report to multiple government agencies using their payroll or accounting software.

With STP and STP-enabled software, businesses can report employee payroll information each time they’re paid. This information includes:

Salaries and wages

PAYG withholding

Superannuation

Itemised allowances and deductions

Overtime

Bonuses and commissions

Types of leave taken

Worker’s compensation

Termination payments

Salaries and wages

PAYG withholding

Superannuation

Itemised allowances and deductions

Overtime

Bonuses and commissions

Types of leave taken

Worker’s compensation

Termination payments

 

Before STP was introduced, businesses were reporting their payroll data every month, quarterly or yearly. This proved to be efficient yet extremely slow and burdensome in terms of transferring data. It was then that the ATO introduced STP as a more effective way of streamlining the reporting process.

Section 5
THE BENEFITS OF PAYROLL SOFTWARE

 

Is your business investing a lot of time and effort into manually processing payroll for employees? Then it’s time to consider a more streamlined approach.

Section 5
THE BENEFITS OF PAYROLL SOFTWARE

 

Is your business investing a lot of time and effort into manually processing payroll for employees? Then it’s time to consider a more streamlined approach.

Using payroll software systems can save time and make the entire payroll process far easier, especially for smaller businesses.

Payroll software comes with- many benefits. These include:

 

  • Greater accuracy

    One tiny mistake can be costly when it comes to processing payroll. Avoid heavy penalties and fines with a payroll software system that reduces the likelihood of human error and ensures that your employees are paid accurately and on time, every time. 

  • Easy to use

    Running payroll can be a real challenge, even for those who have an accounting background. With payroll software, training tools and support features are integrated, allowing staff members with little to no experience in payroll to easily navigate the system. Payroll software does not require any formal training, meaning you can assign the payroll task to employees without experience in processing payroll. 

  • Customisable

    Top payroll software systems can be fully-customisable to meet the needs of each business such as tailoring to meet your contracted individual flexibility arrangements as all modern awards offer flexibility arrangements which most companies use. A payroll system that allows customisation to suit such requirements is extremely beneficial. 

  • Enhanced data security

    Protecting employee confidentiality is paramount. Since your payroll records contain sensitive information including addresses and banking details, you need to make sure that this data is protected. Payroll software uses state-of-the-art security to keep payroll data protected. 

On top of that, payroll software incorporates key functions and features to make tedious tasks a breeze. These include:

 

  • Payroll processing: From timekeeping to calculating overtime and awards, payroll software provides a complete end-to-end processing solution to help you take care of every aspect of the payroll process. 
  • Automatic deposits: Most payroll software can connect with banks and deposit payments directly to the employee’s bank account straight away. 
  • Tax filing help: File taxes on time with payroll software that supports automated calculations that can pre-fill employees’ tax info. 
  • Accounting help: Most software solutions provide certain accounting functions that can help streamline the entire finance process. 
  • Compliance tools: Payroll software helps you to navigate the ever-changing compliance laws of your local and federal legislation. This means your business will always remain compliant and adhere to changing tax laws. 
  • Integration: If your business already possesses a robust HR system, then you want a software solution that can integrate into your existing framework. Luckily, most payroll software solutions provide integration with many other accounting and payroll applications. 
  • Scalability: There’s always a chance that your business will expand later down the road. For this reason, choosing a scalable payroll system will allow you to scale both up and down as your business changes.
Section 6
IN-HOUSE VS OUTSOURCED PAYROLL
Section 6
IN-HOUSE VS OUTSOURCED PAYROLL

Some employers are unaware that keeping an in-house team or one person doing everything isn’t the most cost-effective payroll solution. In fact, in-house payroll is likely to end up costing a business more as manual processing takes more time and resources. Many of these professionals may also have insufficient skills with the more complex aspects of payroll.

“Payroll is an integral process of any
business – so it’s important to get it right.”

The Australian Payroll Association reported that 60.6% of these payroll professionals were looking to develop their skills in legislative compliance whilst 42.9% needed training with award and EBA interpretations. Engaging with an outsourced agency removes the risk of knowledge and competency.

As a business grows and its requirements become more complex, employer’s should really be looking at an outsourcing partner to mitigate risk and maintain payroll efficiency.

There’s so much that can go wrong which can include:

  • Not having in house skills to cover when the payroll processor is on leave
  • Manual calculations costing the employer time and increases the risk of mistakes in payroll or award based calculations
  • Not having the resources in house to stay up to date with payroll knowledge and legislation

These complications and the risk of human error is high when you’re relying strictly on in-house processes. By placing an expert in control of your payroll processing, you can focus more on your core business functions and have peace of mind that you are providing the best for your employees.

So what is the difference between in-house and outsourced payroll? Fully outsourced payroll means hiring an outside company to handle all the work. This takes the pressure off in-house teams and gets rid of the challenge in-house teams face when navigating today’s highly complex regulatory environment.

Some advantages of outsourcing payroll include:

Cost-effective

Technology is one of the key costs associated with managing payroll. For in-house teams, the costs of upgrading software, ongoing licensing, provision of IT support and the ownership or lease of hardware is significant. An outsourced provider will absorAdb all these costs and ensure access to the newest and most reliable software systems and technology.

Ongoing support

A trusted outsourced payroll service will provide ongoing support and can handle any requests or questions to ensure smooth business continuity.

Compliant payroll

Modern Award legislations are always changing. By outsourcing payroll to a trusted service provider, you can be sure that your payroll process will always be up-to-date with the current rules and regulations.

Increased accuracy

Outsourced providers will increase the accuracy of payroll and tax calculations with the help of powerful HR software and auditing tools.

Reduces errors

When HR teams are overstretched, payroll mistakes can happen. An outsourced provider will combine their expertise with professional payroll software to ensure nothing is missed.

Every business has different payroll needs, however as a company grows, so do the risks involved. Considerations need to be made about processes, compliance, legislative regulations and other moving parts when managing payroll. For that reason, outsourced payroll is highly recommended.

Employment Innovations payroll is supported by a legal team to help your business navigate the constantly changing legal and payment obligations of every industry.

Outsource the stress with Employment Innovations Outsourced Payroll Services to help your business grow and prosper.

Section 7
PAYROLL HEALTH CHECKLIST
Section7
PAYROLL HEALTH CHECKLIST

Underpayments and wage theft have made headlines in Australia over the past couple of years! Businesses across all industries and sizes have been caught off guard and thrust into the spotlight. In fact, the Fair Work Ombudsman found 71% of the 1,432 workplaces they investigated in 2019-20, were found to be non-compliant..

Take Employment Innovation’s complimentary 10 Point Payroll Compliance Check to ensure compliance and help identify areas of risk across your payroll.

10 Point Payroll Compliance Checklist

Managing payroll is a very meticulous task and one that can prove daunting for many businesses. Any minor error or failure to meet and comply with the latest industry standards can prove extremely costly, bringing about the risk of financial difficulty and reputational damage to your business. While in-house allows HR teams to exert some control over business finances, challenges in payroll processing are inevitable. With help of an outsourced payroll provider, you can get peace of mind knowing that your payroll process is being handled by an accurate, trustworthy and efficient service.

Reach out to the team to get more information on how you can save time and money with Employment Innovations payroll services.

At Employment Innovations, we see Payroll as a strategic function in every business, whether small or large, because we know the key to being a successful business is to be a great employer.

We offer a full range of tailored solutions to make your Payroll planning easier.

 

If you’d like to work with an industry leader in:

 

  • HR
  • Payroll
  • Compliance solutions
WE CAN HELP!

Reach out to our team today to get more information about how you can streamline your Payroll functions in your business and ensure you are compliant.