Tuesday, 10 Jan 2023
Setting up the payroll system is one of the first things to be done when you hire employees for your business. It keeps the employee information organised, helps pay taxes, and maintains compliance with the government regulations in Melbourne.
It is a straightforward process that begins with hiring a bookkeeper who will help you understand payroll and establish a robust system to pay employees accurately and on time. It can become a challenging task if the business in Melbourne has a large number of employees working on different wages and salaries in different parts of the country.
Remote working has made it necessary to use tools that automate the time-consuming process. Thus, small businesses utilise payroll software to streamline information related to incentives, leaves, overtime, contracts, etc. Setting up payroll for your venture must follow the step mentioned below:
A business needs to register for pay as you go withholding if it has to pay its employees, contractual workers and other businesses that do not provide the ABN. The payments subject to withholding contribute to the income tax.
It is mandatory to register for PAYG Withholding if the business has employees or has entered into voluntary agreements to withhold amounts from payments made to contractors in Melbourne.
The business needs to withhold amounts from the wages and salaries of the workers and submit activity statements and the withheld amount to the ATO. The payment summary is to be given to the employees by 14th July, and the PAYG annual report must be sent to the ATO by 14th August. The amounts reported and finalised via Single Touch Payroll do not need submission of a summary report to the ATO and employees.
The next step is to gather all the details of the employees, such as their name, address, date of birth, tax file number, bank account details for direct deposit, and start date of employment. Professional bookkeepers in Melbourne also need to collect information about salaries, deductions, allowances, benefits, super amount and leave entitlements to check compliance and entitlements.
The bookkeepers calculate the salary and deductions based on the type of employment, such as full-time, hourly or part-time. They also check the minimum entitlements by adhering to the national minimum wage and the National Employment Standards. They calculate the tax that needs to be deducted from the pay of the employees and their super entitlement.
The superannuation responsibility of the business includes paying the super guarantee. It is also the right time to decide the schedule of paying salaries and wages. It could be weekly, fortnightly or monthly. The bookkeeper ensures that the payment deadlines are not missed.
Small businesses in Melbourne need to keep track of the amount going out of the business. Thus, bookkeepers reconcile bank accounts to maintain accuracy and avoid errors. It requires checking the information for every pay period and matching it with the bank statements. Making mistakes with payroll can lead to wrong payments made to employees and penalties.
STP requires businesses to provide payroll information to the ATO for every pay period. The STP-enabled software sends information about the salaries and wages, PAYG withholding and superannuation to the ATO. It reduces the reporting obligations of small businesses in Melbourne. The bookkeeper must ensure that the STP is updated to meet the Phase 2 reporting needs.
The bookkeeper must compare the Payroll Activity Summary report to the Activity Statement to check the amount of gross reportable wages and PAYG withheld. They look for the non-standard withholdings that are reportable on the business activity statement. They determine the past withholdings and YTD tax and check if they match the activity statements.
All the pay periods should be followed with the preparation of the payroll payment register summary YTD report by the bookkeeper in Melbourne. They also need to create the payroll entitlement balance summary and report. The business needs to provide the employees with payslips that have information about their wages, super and taxes.
Most bookkeeping companies utilise payroll management software to automate these tasks and keep the data organised and safe. These tools make the process of setting up payroll a cakewalk and use the cloud to securely store all the data. The software can be updated to meet the changes in the STP.
Every business in Melbourne with employees has to pay this tax on the payroll. The wage bill is needed to calculate the tax obligations. In Victoria, it is applicable to those businesses whose monthly threshold is above $58,333. The payroll tax rate in the state stands at 4.85%, but it is different for regional businesses in Victoria.
Payroll management is one of the most significant tasks in an organisation that recruits a team. Payroll has several obligations which should be met on time to avoid dissatisfying employees and action from the ATO. If you are a new employer in Melbourne, keep the steps above in mind while setting up the process for your small business.
