A simple lesson if new to employing staff
Many of you may be thinking about employing staff and not sure what it entails. There are many good things to make staff work well. Here are some of the main aspects of your payroll and accounting.
- To start with you need to choose and engage people. I won’t go into recruitment processes and documenting the engagement of employees but this is very important.
- You register with the ATO for wages tax or registering for withholding taxes (employee wages tax), in the entity (or ABN) you are trading in. Your tax agent can handle this for you or you may contact ATO to do as well.
- Next, you get staff to complete an ATO form called a TFN declaration form and you lodge this with the ATO. We also suggest having simple employee details form collating personal details, TFN, Bank, and super details.
- You pay them wages and withhold taxes as required by ATO. Using the software is ideal as it will automatically calculate leave entitlements, tax to be withheld, and even pay compulsory superannuation contributions with must be paid every quarter as well.
- Once register to pay wages you will receive either a Business Activity Statement or Instalment activity statement form. This will have boxes to complete disclosing wages paid and wages taxes paid. Along with this, you send in tax withheld on BAS returns to the ATO. These become a tax paid credit for the employee when they do their annual tax return.
- Employees must be given a payment summary of every financial year-end to provide them with the relevant information they need to complete their individual tax returns.
Something to be aware that on 1/7/2019 new single touch payroll was implemented. All this means is that your every pay-run or payroll now needs to be lodged to ATO. You cannot simply do this manually by the paper as many businesses still do. Many businesses are using accounting software that will handle this for you. If not, here are some single touch payroll options in more detail, many are low cost too.
If you need more detail, here is the ATO further information and checklist on employing.
If you would like employment services advice information please leave us your details here.