Payroll is an essential function of any business, and it involves the management of employee compensation, benefits and taxes. Payroll best practices are crucial for ensuring accuracy, efficiency, and compliance in the payroll process. In this article, you can learn about some of the best practices that businesses can adopt to streamline payroll operations and avoid costly mistakes.
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Payroll
Payroll best practices
1. Know your tax filing dates
You should file your payroll report to the ATO via Single Touch Payroll once each payroll has been finalised. In addition, you will report on either a monthly or quarterly basis via your activity statement for the Gross Wages and PAYG withheld from those wages.
2. Avoid including freelancers and independent contractors in your payroll process
Typically, running payroll only applies to paying employees. When processing payroll, the tax burden is split evenly between employer and employee. However, independent contractors and freelancers are responsible for all their own taxes and benefits. It is critical that you determine whether or not they are deemed to be an employee.
As the business that pays a contractor, you are purchasing their service. Lumping in contractors and freelancers into your payroll process may complicate your records. Instead, contractor or freelancer payments should be classified as business expenses.
3. Maintain accurate records for payroll
All businesses are required to maintain detailed payroll records. Accurate recordkeeping can protect your business in the event of an audit. The ATO require businesses to retain payroll records for a period of seven years.
4. Understand how to classify employees
The ATO has set out guidelines to determine whether you are hiring an employee or contractor. Some contractors, those paid mostly for their labour, may also be deemed to be employees for superannuation purposes. Your employees may be classified as being employed on a:
- Full-Time basis (38 hours)
- Part-Time basis (less than 38 hours but set number of hours per week)
- Casual basis (ad hoc number of hours)
- Labour hire basis (worker contracted with Labour Hire Agency) or
- Superannuation Income stream basis (Super Provider making super income stream payments)
Whether you are a small business owner or a payroll professional, these tips will help you improve your payroll processes and ensure that your employees are paid accurately and on time.
QuickBooks Payroll powered by Employment Hero is among the most popular payroll software programs small business owners and first-time payroll users choose. Offering worry-free payroll processing, time-saving automation, and many other advantages, QuickBooks Payroll provides the support you need, all year-round. For tips on setting up QuickBooks Payroll, head to the Payroll Resource Hub for articles and guides to help you get started.
Disclaimer: Intuit does not provide professional advice. We may provide you with information that may be of use to you, however this is not to be considered as a substitute for getting your own professional advice. Intuit is not liable to you for your use or reliance on the information provided by it.
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