How payroll software works: an introduction for Australian employers

Small business owners reviewing documents in front of laptop

Learn how payroll software works and how the key features of payroll software ensure your small business stays compliant in Australia.

This is where payroll software comes into its own. This guide will show you how payroll software works and the key features of payroll software that streamline your payroll process and ensure your business stays ATO compliant. Read on to learn more about how payroll software works or skip to any section by using the links below.

How does payroll software work?

Payroll software uses technology to automate the necessary requirements of processing payroll including calculating wages, withholding taxes and other deductions, paying government employment taxes and delivering pay slips to ensure employees get paid the correct amount on time. Payroll software works by automatically calculating the correct amount your employees should be paid each pay period based on the hours they’ve worked under their industry award.

What does payroll software do?

In a nutshell, payroll software makes it easier to process business payroll by automating the entire payroll process, ensuring you pay your staff the right amount at the right time. And that’s crucial in holding onto your staff – happy staff will stick around for longer, which improves your bottom line. Below are some of the functions of payroll:

  • Collecting employee information
  • Tracking employees’ work hours and timesheets
  • Calculating employees’ pay based on hours worked under their relevant industry awards
  • Withholding the correct amount of taxes and deductions
  • Reporting wages, tax withholding and super contributions to the ATO
  • Generating employee payslips
  • Allowing employees to submit timesheets, log expenses request leave and view their payslips

Key features of QuickBooks payroll software

QuickBooks payroll software uses automation to streamline your small business payroll and ensure compliance. 

  • ATO and STP compliance: QuickBooks payroll software has inbuilt Single Touch Payroll and is ATO approved. This means you can send complete and ATO compliant reports with every pay run. The advanced payroll option includes pre-built awards allowing you to pay multiple employees based on different industry awards.
  • Employee self-service: All QuickBooks payroll software plans include the WorkZone app allowing employees to submit timesheets, view their payslips, manage and log expenses and request leave.
  • Rostering and wage overview: Employees can access rosters allowing them to manage their shifts in the QuickBooks advanced payroll plan. 
  • Streamlined contributions: Manage super contributions within QuickBooks payroll software to save you time.

Who needs payroll software?

The simple answer is anyone with employees, or who pays themselves as an employee. Employers who pay hourly wages to their employees greatly benefit from investing in a payroll software that accurately calculates wages and tax withholding. Small business owners with a larger number of employees can save hours by using a payroll software like QuickBooks that takes the manual labour out of payroll.

Which payroll software is right for your business?

If you have fewer than 10 employees you can use ATO-compliant free payroll software to report PAYG information online, but this may not help with all requirements. Larger businesses or those looking for additional functionality will need to use paid-for software that’s ATO compliant. To get the most out of your payroll software, choose a system like QuickBooks Payroll, powered by Employment Hero, that can support:

  • payments and deductions including Medicare, super, student loans and statutory payments (sick, maternity, paternity, adoption and shared parental)
  • Superannuation schemes, assessing employees, creating communications and managing contributions
  • a variety of payment runs, such as weekly or monthly
  • error corrections, including editing multiple employees and pay periods at one time
  • full integration with other systems like your business accounts, to help reveal business insights. It’s the only way to ensure maximum time management, reliability and accuracy.

It’s important that payroll software integrates and grows with your business. When choosing the right payroll software for your business it’s important to consider the following:

  • Features: Ensure that the payroll software features are robust and support your business needs. For example, QuickBooks payroll software features inbuilt award rates to support employers with casual employees and contractors.
  • Compliance: Ensure the payroll software you choose is compliant with local taxes and ATO reporting. QuickBooks payroll software has inbuilt STP to facilitate payroll compliance and is ATO approved. 
  • Affordability: Payroll software costs will vary depending on the features available. It’s important to consider that a payroll software may be more cost effective for your business than hiring a professional to run your payroll or outsourcing it.
  • Accessibility: Consider choosing a cloud based payroll software that enables you to make a pay run anywhere, anytime.
  • Compatibility: You want a payroll service that works with the programs you already use, like time and attendance and accounting systems.
  • Flexibility: Consider choosing a payroll software that has the option of advanced plans and features that can grow with your business.
  • Customer service and support: Make sure the payroll software you choose offers a step-by-step guide to getting set up and offers good support if you’re unsure about anything.

What is the best payroll software?

QuickBooks offers a choice of secure payroll accounting solutions. There’s QuickBooks Standard Payroll for simple payrolls and QuickBooks Advanced Payroll for complex payrolls. Find out more about QuickBooks Payroll here.

It makes sense to simplify your payroll – you’ll be glad of this when it comes to year end. And with more time on your hands, you can concentrate on what really matters - growing your business.

We hope you’ve found this article useful. Find out more about how QuickBooks’ payroll solutions could help streamline the way you pay your employees and stay compliant.

Discover QuickBooks online accounting software today