When you’re running a small business, it can be tempting to do everything yourself to keep costs down.
But as much as you’d like to be a jack-of-all-trades, it can be a good idea to let the experts look after the trickier aspects of your business. Yes, it will eat into your profits. But it will save you time—a commodity that often seems even more scarce than money.
And payroll is definitely one of those trickier aspects.
It may seem simple enough. Work out how many hours your employees worked, and pay them what they earned each week/fortnight/month. Simple, right?
Unfortunately, there’s a lot more to payroll than you might think, such as:
- staying on top of the myriad of PAYG (Pay As You Go) codes
- knowing exactly what information needs to be reported for each employee
- keeping up with the various payroll deadlines.
And this is something you definitely don’t want to get wrong. Because if you do, you face the wrath of not only your employees but also the Australian Taxation Office.
That’s why outsourcing your business’ payroll function to professionals is a great option. They’ll make sure your employees get paid accurately and on time, leaving you to get on with running your business.
But while they’ll be doing most of the work, they still need your help, especially in the beginning. And it’s important to not make any mistakes, or it could cost your business time and money. Here are five common mistakes business owners make with their payroll, and how to avoid them.
1. Not having accurate employee details
You need to keep accurate records of each employee’s:
- Tax file number
- Full name and address
- Start date and/or termination date of employment
- Date of birth
- Pay details such as gross wage, allowances, hourly rate and employment period.
You should get this information when they start working for you, and give them a way of letting you know of any changes so you can update your records.
2. Not reconciling and reporting the necessary information
Each year you need to complete and submit reconciliations forms, which report each employee’s annual taxable wages, PAYG taxes and superannuation.
3. Not keeping up with changes to payroll tax
Tax rates change every year, and so you need to make sure you update the tax rates in your accounting system on 1 July.
4. Missing payroll deadlines
There are different payroll deadlines for:
- PAYG withholding
- Annual payment summaries
- Quarterly Super reporting
- SuperStream obligations.
Make sure you know when they all are so you don’t miss any of them.
5. Not bothering to research payroll software
By setting up your payroll correctly from day one your business will run more smoothly, saving you a lot of time (not to mention a lot of headaches). And these days, software such as Xero and MYOB can make the process a lot easier.
So take the time to look at the various packages available, and see which one will work best for your business.
Chances are that unless you already have experience in payroll, you still may not be sure what you need to do. And that’s where we can help. MBC Bookkeeping is here to answer your questions and help you with all aspects of your business’ payroll so you can focus on your business.
So get in touch with us today, and let us help you look after your payroll.