No matter what size your business is, you need to prioritise paying employees the right amount at the right time, all the time. End of story.
With the most suitable software for your business, this can be fairly simple. Most of the current financial software now has the functionality for STP (Single Touch Payroll) that is now required for any business by the ATO. Many of them also have the legal and tax requirement information and calculations inbuilt into the systems.
It is still smart management and business practice to understand and know what your obligations are regarding payroll and all the financial and legal requirements surrounding the process.
What is STP?
STP has been in force since July 2019. Whenever you administer payroll for your employers, your STP enabled financial software reports to the ATO on salary and wages, taxes and superannuation liabilities for your business.
So while reporting to the ATO is single touch, you still need to ensure that you get the elements correct from the outset.
Some of the trickier areas of payroll to navigate for SME’s are all the other components of payroll.
Superannuation
If you are paying an employee more than $450 gross in a calendar month, you are required to also pay them 9.5% of that gross amount in superannuation contributions. The employee can elect their own superfund, and you can pay it during the payroll run or each quarter.
If you elect to pay it each quarter, it’s recommended that you have it paid to a holding account each pay run to ensure it doesn’t get away from you. You can also pay multiple employees superannuation in one batch with the SuperStream system.
Payroll Tax settings and the thresholds
Payroll tax, and thresholds, differ in states and territories in Australia, you can find out more on the Australian Revenue Office website.
What you need to know about this is most important is setting up your employee correctly within the system that you use. You may have different employee statuses with different individual tax requirements. These specifics need to be correct, so the software can calculate the withholding tax for your business correctly.
Leave allowances and considerations
You will need to consider the times that your employees will be away from work and their entitlements to receiving pay or wages while they are. Some different types of leave that employees should be paid for are annual leave, maternity leave, sick or personal leave, public holidays and long service leave as well as others.
The requests for leave can vary across the types of employees that you have in your business. Fair Work Australia recommends to also consider factors found in the National Employment Standards, State and Territory legislation, current award rates and even the employee contract.
What’s the best software for SME Payroll?
The short answer to that is – there is no correct answer. Many of the more common applications now have STP ability so much of will come down to your personal and professional preference.
Some of the more popular for small businesses are Quickbooks, Xero, Sage and Bamboo, but some of the lesser-known have the same capabilities. It’s the functions and capabilities that you’ll need to determine what’s best for you.
Integration with your other business software and apps and your own technical ability should be considered. Comparative sites can help you decide what’s best for your business.
We can also help you make decisions about the financial aspects of your business, including the software that will make your financial management and payroll simple. For advice or assistance understanding or email us today.