New Employee Payroll Setup & other obligations
CURRENT AS AT 11 Oct 2022
Have you recently hired a new employee or thinking about paying yourself a wage from your company or trading trust?
We have outlined the steps below to assist you with links to the relevant websites and relevant Xero help articles. Please note these may vary depending on your individual situation. These are not exhaustive.
Check if you need to prepare a Letter of Offer/Employment Agreement detailing terms of employment and get it signed by the employee (some useful info can be found here on the FairWork website)
Obtain Tax File Number Declaration from your employee
Obtain Super Choice form from your employee (even for under 18 year olds)
Setup in accounting system (we only use Xero - steps below applicable to Xero) a) Check organisation details are correct b) Check pay items are correct and being included at W1 where applicable c) Check holidays tab and see if anything needs to be changed d) Add in superannuation funds e) Add new employee in Xero i) Setup applicable leave (annual, personal, LSL etc) ii) Complete TFN declaration in Xero and file with the ATO iii) Setup pay template
Setup Single Touch Payroll if you haven't already and this is your first time employing someone
Setup superannuation auto processing in Xero (ensuring that your subscription is a premium 5 and above)
Register for PAYGWH with the ATO if you haven't already and this is your first time employing someone (if backdating will need to call the ATO to reissue any BAS's)
Update BAS settings in Xero to include PAYGWH
Other things you need to think about (not exhaustive):
- does the award they are hired under require leave loading to be paid
- what does the award they are under say about other loadings, penalties, overtime etc
- what is the pay run period going to be (weekly, fortnightly, monthly)
- will there be any long service leave paid as part of an industry fund (like the building fund etc) or will you need to allow for it
- if paying yourself ensure you have thought about how much to pay ensuring tax effectiveness and cash flow (remember the wages incur tax and super at the current rate of 10%)
- ensuring that super is processed and paid each quarter by the due date
- ensuring super details are entered in for all employees regardless of age, if someone under 18 happens to work more than 30 hours in a week they will be entitled to super (changed from 1 July 2022)
- if you aren't registered for GST and currently don't need to do a quarterly or monthly BAS then you will now need to do a quarterly or monthly BAS depending on your withholding amount for the year
- you will also need to ensure that the Single Touch Reporting is finalised for the year by the due date
If your employee is covered by an award you will need to review this to ensure that you are aware of all the terms of employment and rates of pay under this award. You will also need to ensure that you review the award on an annual basis for any changes to conditions and rates of pay. We cannot offer advice on Workplace Relations so if you require advice regarding any aspect of the employment process and rates of pay we suggest you contact an expert or do your own research.
Natalie Lennon
Founder & Director
Two Sides Accounting
02 9030 0269
www.twosides.com.au
@twosidesHQ
natalie@twosides.com.au https://au.linkedin.com/in/natalielennon