Is a new employee joining your business? Before the first day of his arrival, there are a number of things you have to get completed. Once the HR works like the signing of contracts, up-gradation of files are done, it’s time for you to focus on the payroll. Not just paying that employee, a payroll covers other things too, which are hiring, firing, bonuses, salary, leave dates etc. The payroll also covers tax-related accounting and that is why you have to follow the basic rules associated with it otherwise there will be a risk to face prosecution.
What does payroll actually mean for a small business?
As mentioned in the introduction, payroll will involve a number of responsibilities. The first thing you have to do is to hire a new employee to your business company. Ideally, payroll for a small business means:
- Giving payment to that employee: While preparing the contract, the amount of salary and time of payment must have been mentioned there. Now, after signing of it, you have to make sure that he/she gets the payment properly. You should pay that person with the right amount at the right time (like, if it is mentioned that the payment would be given at the beginning of the month, you have to pay that in the first week of every month). Otherwise, it may breach the contract as well as the employment law.
- Making accurate deductions: For every employee, a specified percentage is deducted as tax from his/her income. You have to do the accurate deductions from their pay as tax and retirement.
You have to comply with the government-specified rules for the payroll.
What are the payroll options available for your small business?
If your small business has a substantial number of employees, your payroll will be more complex. And this will be more applicable if there are a number of employees based on hourly wages and salaries. Your payrolls will then include a number of factors like commissions, allowances, expenses claims and leave entitlements. Well, you can handle this matter in certain ways.
- Pen and paper or spreadsheets: if your business company is filled with a handful of employees, then this method can be applied. However, the drawback of using spreadsheets is that, tax offices usually do not accept them.
- DIY software: Application software is far more useful in the sense that, these involve less physical effort. Apps can calculate pay and deductions accurately and even fill out the tax forms for you. Well, don’t expect them to pay the tax, however. You have to pay it yourself.
- Payroll service providers: For better experience, you can outsource your payrolls to professional experts. Some of the providers will do the whole thing for you, quite meticulously, thus reducing your headache. Others may provide you necessary tips to complete the deduction.
- Accountants and book-keepers: For necessary payroll compliance, it is not mandatory to go to a payroll company every time. You can go to any accountant or any book-keeper who can do the job for you. On this note, you can utilize Xero.
How Xero can be useful for your small business?
As online payroll software, Xero has a lot of benefits for the purpose of payroll compliance. It can save enough time of yours. You can get access to it at any time and from anywhere. There will be no fear of losing data in case your computer system gets crashed. You can invite a book-keeper or an accountant into your payroll system no matter where they are. Say, your laptop gets stolen or may get hacked. That should be fearsome, definitely. But, don’t worry. Cloud-based tools use strong encryption to secure your data, reducing any chance of losing it.
What other options you can opt for?
Apart from Xero, there are other service providers too which you can choose according to your convenience. These include Quickbooks or MYOB. There are other companies too, which use these kinds of software for professional use and thus you can get help on this matter from these companies too.
What is involved in payroll compliance?
In order to comply with the government, you have to observe a number of responsibilities.
- You have to pay the employee inappropriate amount as stated in the contract and also deduct exact taxable amounts from the payment, which is applicable as per government law.
- There should be a well-recorded document for every payment you process. So, it is always recommended to provide your employee with a payslip that states all the details. This is very important to keep clarity.
- You have to file and pay taxes within time. For filing purpose, you may consult a professional.
- You have to pay deductions like retirement contributions at appropriate places.
- You should keep the payroll records for at least seven years. For keeping records, you may hire a skilled bookkeeper. Xero is useful accounting software from where you can get Xero bookkeeper Perth, in case you own a small business in the city of Perth.
What do you mean by payroll deductions?
Deductions are the amount of money that you take away from your employees’ salaries before paying them. Different payroll deductions include:
- Retirement contributions: These are the contributions that are made to employees’ retirement schemes. You can deduct these amounts from their salaries, which are very beneficial to them after they retire.
- Taxes: There are different taxes that anyone who earns, has to pay. Apart from income taxes, there are other benefit taxes too. These amounts are also deductable.
- Other payments: There are other payments too, which employees often go for like child support or medical support.
Apart from these three, your employees can arrange for other deductions also which may come directly from their payment. These include additional healthcare insurance, charitable donations or other retirement schemes. For more details on this point, you can search on the official website of Xero.
For more information regarding payroll compliance for your small business in Perth, you can search for other organizations which provide necessary payroll services Perth, in case you’re not used to using application software.
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