If you hire staff, getting your payroll absolutely right is vital.
Payroll is important not only from a financial point of view but as it directly affects your employees, it is the key to the success of your company. Staff payment problems can lead to low morale, poor productivity and even a government audit.
To help you avoid common payroll problems you need to take the time out to set up your payroll correctly and use reputable software to assist you or your bookkeeper in making your business run smoothly.
Are you up to date with legislation and ATO requirements? Do you have visibility on what your employees are actually costing you and are you able to forecast or measure productivity?
Here are some common errors that I have come across for you to look out for when preparing your payroll for your staff.
• Are leave entitlements being calculated at the correct rate? Generally four weeks annual leave per year, 2 weeks personal/carers leave per year is the norm. It is crucial that leave accrual is calculated accurately. While it is best practice to show employee’s leave balances on their pay slip, it’s not a requirement. Employers do need to tell employees their leave balance if they ask for it.
• Do the entitlements need to be adjusted? If your payroll is set up to record a number of hours per pay period and your employee works less, you’ll need to make an adjustment for the hours that they actually worked. Has annual or personal leave been taken and recorded? Is leave loading applicable?
• What’s the age of your employee? This can have implications on their pay rate and superannuation eligibility. If your employee is under 18 years of age they must work 30+ hours in a week, and earn over $450 in the month to be eligible for superannuation. Employers have to pay a superannuation contribution of 9.5% of an employee’s ordinary time earnings. This is increasing over 7 years to 12% by 2019. Superannuation has to be paid at least every 3 months, into the employee’s nominated superannuation account.
• Are your employees entitled to be paid allowances and are these being correctly recorded in payroll?
• Was there a public holiday in the last pay period and did they work that day? Are they entitled to public holiday penalty rates? Don’t just assume what days are public holidays. Last Easter for instance the public holidays were Friday, Saturday and Monday. Many were surprised that Saturday was listed as a public holiday. Check the website for Fair Work Australia for a list of official public holidays for each year to avoid misunderstandings.
As you can see there is a lot to consider when employing staff and ensuring that your payroll is compliant. If you need assistance with your payroll and bookkeeping services call Jaleana on 0400 102 358. For further information check out her website www.bookkeepingfairyperth.com.au