As a small to medium sized business owner, we understand that cash flow can be a concern and payday seems to roll around a lot sooner each pay cycle. However, cutting corners by hiring the wrong person to look after your payroll can cost you more than your reputation: it can close your doors forever.
According to research conducted by recruitment company Robert Half, one in five HR Managers said that hiring the wrong person had cost their company significantly. While you might be doing your own HR, hiring an unskilled person can cost you money in training, induction and later on paying them out if they turn out to be unsuitable.
The question is, how comfortable are you, as a company that your payroll person knows what they are doing when it comes to keeping abreast of laws and regulations?
Australian payroll legislation is a complex beast – and it is constantly changing. If you hire someone who is not well versed with payroll laws, then you are likely not compliant and may already be in trouble with Fair Work Australia (FWA) or the Australian Taxation Office (ATO) without knowing it.
Would your business hold up well to a rigorous audit if it came to that? Could it survive the negative publicity?
Here are a few things to consider when hiring someone to do your payroll even if it is for a few hours every week. Do they know about:
- Ordinary Time Earnings (OTE) for Superannuation Guarantee, especially the difference between overtime and penalty shift loadings?
- What are the Superannuation Guarantee rules for employees under 18 years of age?
- What, if any part of a termination is included in OTE for Superannuation Guarantee calculations?
- When terminating an employee, what taxes apply and where do these amounts appear on a Payment Summary?
- What is an ETP and when / how should it be paid and taxed?
- What pay elements should accrue leave?
- Long Service Leave – do casuals accrue? What is the entitlement and pro-rata for the relevant states you pay for? How is the final calculation done on termination as this can differ? Does your reporting accurately show your liabilities?
- Are you providing your new employees with the relevant paperwork? A National Employment Standards (NES) Information Statement, TFN Declaration and Super Choice form should be mandatory documents for all new hires.
In addition to all of the above, employers must ensure that simple things like record keeping, payslip obligations and minimum wage requirements are met as FWA have recently introduced increased penalties under the Vulnerable Workers Act as high as $126,000 for individuals and $630,000 for companies. With over 20,000 tip offs to the Fair Work Ombudsman via their anonymous online tool since its launch in mid-2016, you can’t be too careful.
In today’s technologically advanced society there are cost effective payroll solutions on offer. Outsourcing payroll for a small to medium sized business is far more cost effective than hiring someone part time or for part of a role.
Knowing your costs to process payroll helps you choose the right solution for your needs. Most of the time a payroll service will offer a “pay as you go” pricing model based on a price per pay so you know upfront how much you will be out of pocket to run payroll. This is more cost effective than getting charged hourly by an accountant or bookkeeper and much better than paying a pro-rata salary plus a software cost.
With the right payroll company, you get expert knowledge and the most up to date payroll software that takes into account all current legislation relevant to your business. This ensures you will not run into nasty compliance issues down the track or cost your business a lot more money than necessary.
If you want to learn more about how you can outsource your payroll and get all of these benefits, contact E-payoffice for a demo.