A Complete Guide to Payroll for Small Businesses

‍How to Get Started With Payroll 

Simplifying the process of compensating your staff starts with a few simple questions. For every employee, you need to consider:

1. What is the nature of the job you're offering: is it permanent, temporary, or casual?
2. Is your worker classified as an employee or a contractor?
3. Is your employee authorised to work in Australia?
4. What rights does your employee have under anti-discrimination legislation?
5. What records must you maintain for this employee?
6. Are you providing clear wages and benefits?
7. How much tax should be withheld from your employee's salary?
8. What are the superannuation contributions you need to make?
9. What health and safety provisions apply to your workplace?
10. Is workers’ compensation insurance necessary for your employee?
    

Registering for Payroll Withholding (PAYG)

Do I need to register for Payroll Withholding?

If you are a small business in Australia with workers, you'll likely need to register for payroll withholding - commonly known as Pay As You Go (PAYG). 

You must register for Pay As You Go (PAYG) withholding before you're first required to make any payment that is subject to withholding.

The most common payments you withhold amounts from are those to:

• Your employees
• Your directors
• Businesses that don't quote their ABN to you
• Contractors who have a voluntary agreement with you
  

You can sign up for PAYG withholding via the Australian Taxation Office (ATO) website here.

Basic steps to stay compliant with Pay As You Go (PAYG):

Before you release any payments to your employees, you must ensure you're registered for PAYG withholding first. 

Once registered, these are the steps to take to make sure you stay compliant:

1. Withhold required amounts from wages and any other eligible transactions
2. Lodge activity statements and make the necessary payments to the ATO
3. Prepare payment summaries for your employees and any other recipients
4. Present the ATO with a PAYG withholding payment summary report each financial year.

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Payroll Essentials for New Businesses

Managing payroll with Thriday

Payroll is coming soon to Thriday.

Managing payroll manually‍

If you prefer to manage your payroll manually, here’s a comprehensive guide to ensure the process is smooth sailing.

1. Gather Employee Information Before anything else, make sure you're equipped with all the necessary details for each employee:

• Full name and residential address
• Date of birth
• Tax file number (your employees can get their TFN here)
• Start and end dates of employment
• Preferred bank account for wage deposits
• Relevant payment information: gross wage, allowances, hourly rates, etc.
  

2. Account Reconciliation is Key. Maintaining accurate finances starts by ensuring your bank records align with your expenditures. Here's a quick guide:

• Match total gross wages from the Year to Date (YTD) payment register to the YTD wage expenses.
• Match outstanding PAYG liabilities to the pending PAYG for the upcoming Business Activity Statement (BAS).
• Equate outstanding superannuation liabilities to unpaid super for your reporting period (monthly or quarterly) to the ATO.
• Reconcile the monthly payroll tax.
  

3. Embrace Single Touch Payroll (STP). STP is revolutionising how you report tax and super information to the ATO. By using STP-enabled software, you can:

• Automatically relay key payroll details to the ATO during every pay cycle, such as PAYG withholding, wages, and super.
• Maintain your preferred payment frequency, whether that's weekly, bi-weekly, or monthly.
  

4. Reconciling PAYG Withholding Ensure your PAYG withholding aligns perfectly:

• Match unpaid PAYG to your balance sheet and the PAYG liability.
• Compare the yearly PAYG paid to the YTD payroll tax summary.
• Cross-check PAYG for the current month or quarter with corresponding payroll summaries.
  

5. Stay Updated and Organised with Reports Every payroll cycle, ensure you:

• Generate a YTD payroll payment register summary.
• Prepare both a payroll entitlement balance summary and a detailed report.
• Deliver payslips (containing wage, tax, and super details) to your staff via email or post.
  

With so many moving parts, using a reliable payroll or accounting software can be a game-changer in streamlining the process. 

With all your transactions automatically categorised and securely stored in one place, keeping organised with reports and staying on top of your payroll essentials becomes much easier. Let Thriday make tax time, relax time!

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Benefits of Payroll for Your Small Business

Leveraged correctly, payroll can be much more than just compensating employees. Here’s how payroll can be a treasure trove of business insights.

• Unearth Employee Trends: Payroll sits at the confluence of operations, finance, and HR, offering a panoramic view of your staff's demographics, their preferences, and what drives them.
• Enhance Business Performance: With Thriday’s automatically generated financial reports, you can compare your payroll data with all elements of your revenue, sales, costs and more to get a holistic financial overview to streamline your bottom line.
• Stoke Strategic Vision: Payroll can be the catalyst for futuristic planning. By analysing payment patterns and employee productivity, you can identify areas ripe for innovation, be it offering flexible hours or diversifying roles.
• Streamline Organisation: Efficient payroll management requires a systematic approach, which can positively bleed into other areas such as cash flow and invoicing. Start using Thriday to automate the organisation of your finances today and become a well-oiled business machine.
  

With the right processes and software in place, payroll is not just an obligation – it's an opportunity to drive your business forward. Thriday makes lodging your BAS as easy as clicking a button, and gives you the birds-eye view of all the financial data in your business to really unlock the insights of payroll. It’s like a personal CFO in your pocket!

Take the hard work out of payroll management with Thriday and enjoy the benefits of lightning lodgment, automated accounting, easy payments, instant invoicing, quick quoting and more.

Learn more about how Thriday can eliminate financial admin and help your business thrive today!‍