Payroll Procedures on How to Employ Someone
For an employer there are certain procedures to follow when employing someone. There are many requirements for this and it can get quite complicated and time consuming. Whether you do this yourself or make use of a payroll service is up to you.
Employing Someone New
A new employee must fill in the following forms:
A TFN declaration form of which the original must be sent ATO.
ATO choice of superannuation fund form. An employer must have a default fund in case the employee does not a super fund. The employees TFN form should be sent to the superfund.
A bank detail form so that wages can be paid into it.
Sound complicated enough yet? Thinking payroll outsourcing might be the way to go?
Preparing Wages
In order to pay your employees you will need a PAYG tax table for weekly, monthly and fortnightly pay. This lists amounts that should be withheld from the gross wage of your employee and can be obtained from the tax office. You will also need to know if your employee has any HELP liabilities or debt so that you can also deduct this from their wages. You could save time by not doing this and employing a payroll service.
Recording Information
You will need to keep records of each employee with their name, date of birth, award rates and date they commenced paid employment with you from. This is where you will record each payment, annual leave, carers or sick leave and the dates they are taken. Deductions from employees’ wages will need signed written authority. For each period of pay you must record in the payroll system you are using and on the employees pay slip which you give to them. The information that should be on them is your employee’s name, date of pay period, normal earnings paid, overtime and other earnings and allowances. To get the final total of pay add the different pay categories together. If you choose to go down the route of payroll outsourcing they will take care of all this for you.
Calculating Tax
You calculate the tax on the total gross pay by using the PAYG tax table. You should record this deduction under the tax withheld heading. Any other deductions go under the other deductions heading. You then subtract the total of these from the total gross earnings to give the nett pay of your employee. This is then the amount you transfer to your employees account. Again choose a payroll service and this will be taken care of for you. Click here to read about 5 Urgent Reasons to Outsource Your Payroll Now.
Earnings over $450.00 per Calendar Month
If you have already decided to go down the route of payroll outsourcing then you will not need the following but if not; If your employee earns over $450 per month and is over 18, you must pay the superannuation on the gross wage. This payment must then be recorded in your payroll system and submitted at the end of every quarter. There are large penalties if you are late in paying this.
Finally there are some important dates when you are paying wages that you will need to take note of if you have decided not to use a payroll service. PAYG tax that has been withheld from your employees must be paid monthly or quarterly. Payment summaries should also be given to your employees by the end of the year which is 14th July. You must submit this to ATO by the 14th August. Visitg https://www.ato.gov.au/Business/PAYG-withholding/ to read more about PAYG withholding.