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Payroll compliance
Payroll

Payroll compliance: A beginners guide

There’s a lot to consider when onboarding a new employee

On top of employee contracts and hiring payroll registration comes next. However, there is more to the payroll process than paying employees. Once the payroll system is set up, it will entail hiring, firing, leave, salary, benefits, bonuses, and more. 

Understanding payroll compliance

As a business that pays wages, you have to address compliance issues through your payroll data. Your payroll data will show wages paid, pay payroll tax, manage deductions, and produce financial year reports. 

Beyond managing your employees, your payroll system is also linked to tax accounting. As payroll taxes are government legislated, a lack of compliance could land you in legal problems. There are a variety of forms to complete to ensure you are paying the right rate for the hours worked and withholding the correct amount of taxes. It can be complicated, but payroll compliance is a compulsory factor for all businesses. 

How to achieve payroll compliance 

There are five key points to consider

You’ll first need a cloud payroll software before registering for payroll tax. Once this has been achieved, you can focus on onboarding your new employees.

The first thing you do with a new employee – confirm their hire, review their details, ensure you have the correct tax codes and salary information, and input the correct data and working hours. You only need to input this information into the payroll register for the first time. Once they are in the system, you can process their pay just as you do for the rest of your team. Confirm the bank account details with the employee in writing and set their start date as the date their details go live. 

You will need to enroll your employee in your superannuation or pension scheme. This is one of the earliest compliance minefields. A mistake at this point can have long-term consequences. So, be sure the contributions are calculated correctly, as this will vary from employee to employee depending on age, salary, and seniority. 

Consider how you handle expenses, how often you pay, whether there are overtime pay rates, or holiday pay rates, and is that in line with local legislation? You need to pay your employees according to the relevant laws. It's always wise to consult an accountant, especially as you're getting started with a new business or a new payroll system. 

Grow Your Business with QuickBooks

Checklist For Payroll Compliance in Australia

A payroll compliance checklist will help you tick off each compliance point to ensure you are managing payroll processes correctly and maintaining your legal compliance. 

Modern Award

  • Do you know which Modern Award applies to your employees?
  • Are you familiar with the National Employment Standards?
  • Is there a process in place for your employees to apply for leave? Do you have accurate records of their entitlement and leave taken to date?
  • Are you aware of your obligations in line with these regulations?
  • Has there been a change in pay conditions since your last audit? These are typically updated by Fair Work at the start of every financial year.
  • Do you issue payslips to your employees each pay period?

The answer should be yes to all of the above questions.

Pay Rates & Records

  • Are you paying your employees in line with the correct Modern Award?
  • Are your payslips in line with time and attendance records?
  • Have you used the correct overtime and penalty rates?
  • Are the entitlements and deductions correct? 

Obligations

  • Review payroll tax
  • Review superannuation obligations

There's more to compliance than paying your employees; you need to ensure you meet superannuation contributions and payroll tax obligations. 

Payroll Records

Business owners must keep a record of time, attendance and employee time records for seven years. This includes:

  • Employment agreements
  • Timesheets and rosters
  • Payslips 

You will need to produce these if a Fair Work Inspector attends your business to carry out a payroll audit.

Reconciliation

If you find discrepancies, you need to take immediate steps to remedy them. This can include a variety of solutions, including

  • Employee back pay
  • Updating policies or records
  • Organising records 

How QuickBooks Can Help You Maintain Compliance 

While taxable wages in Australia are set out in advance, as an employer you need to know threshold amounts and understand what to withhold in taxes. Luckily, with Single Touch Payroll (STP), the system allows you to electronically pay the Australian Tax Office (ATO) what you have withheld. QuickBooks Payroll Software powered by Employment Hero is ATO-approved, and with STP, you can simply submit the necessary reports automatically and maintain ATO compliance. QuickBooks Payroll makes payroll simple and is the smart way to make sure your business remains payroll compliant. 

If you choose to handle payroll in-house, you need easy-to-use payroll software. QuickBooks is simple, compliant with the law, and links to your accounting software. Why input all of the same information twice when you can sync them? Your employees can use the Swag app to apply for leave and swap shifts with colleagues, and you can approve it all wherever you are. Onboarding has never been this easier. 


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