Payroll 101: a helpful guide for new employees
Setting up your first payroll may seem like a daunting task, but our helpful checklist should help you get off to a good start.
As a new employer, the thought of setting up a payroll system may not have you leaping out of bed in the morning, but it definitely pays to get it right from the get-go. Mistakes can be costly and cause financial stress for you and your staff.
To help make the process a little easier in meeting your responsibilities, use our helpful checklist. By working through each step, you’ll be on your way to a hassle-free payroll system that ticks all the right boxes.
Do you have time to handle payroll yourself? This may save you money and give you more control.
Alternatively, you can outsource to a reputable bookkeeper, accountant or payroll service provider.
Essential information includes:
Note: You should have most of the above as part of a thorough onboarding process.
Make sure you’re meeting the minimum entitlements for employees. You’ll need to understand:
TIP: Not sure what should be going into your employees’ pay packets? If they’re covered by a modern award, try using the Fair Work Ombudsman’s Pay and Conditions Tool (PACT) to calculate their pay rate, shift work and leave entitlements.
To stay on the right side of the ATO, you need to meet your PAYG withholding obligations.
Don’t know how much tax to collect? The Tax withheld for individuals calculator can help.
You’ll need to identify which super fund will be used as your default fund for your employees if they don’t have a preferred provider. This is compulsory, so you’ll need to have this ready before they start.
STP means you are now required to report payroll information to the ATO in real-time with every pay run. The good news is the ATO has made concessions for micro-employers (1-4 employees) to help you get onboard.
Employees and contractors are treated differently for tax and super purposes, and getting it wrong can incur penalties.
Not sure where a worker fits? Use the ATO’s employee/contractor decision tool.
If you’re managing payroll in-house you’ll need, at minimum, a digital solution that can handle STP compliance. Beyond that, you can tick off the features that work best for you below.
TIP: You should have most of the above as part of a thorough onboarding process.
Payment cycles can be weekly, fortnightly or monthly. Set reminders or schedule recurring payments by direct deposit to make sure you’re never late.
Pay slips must be issued to each employee:
Under workplace laws you have to keep accurate and complete records for all of your employees for 7 years - even if they leave. Make sure your payroll solution regularly backs up your data.
You’ll be holding a lot of confidential information on your new staff, so it’s vital to employ best practice privacy standards. Regardless of whether you have your payroll in-house or not.
Investing time upfront in a comprehensive payroll system is time well spent. The right system should help you meet your compliance obligations and avoid costly errors, simplify processes and keep your employees happy, leaving you free to focus on building your business.
This information does not take your personal circumstances into account, is general in nature, and should be used as a guide only – and not relied upon. We recommend that you seek independent professional advice about your specific circumstances before choosing a business finance product.