Continuing on with our October Payroll blog spotlight, this week we’re delving deeper into Payroll and the complexities around Payroll.
Payroll can be challenging, regardless of the size of your business. Changes in state and federal tax and employment law can make Payroll and Payroll tax complicated and time-consuming. But being aware of these common complexities will ensure you manage your Payroll effectively and avoid making costly mistakes.
Overtime payments throwing out the wages budget
Ensure your employees understand your overtime policy and enforce it. If overtime is worked however, you are required to comply with relevant contracts and/or awards and ensure your staff are remunerated accordingly.
Always be aware of all of your employees’ hours by employing systems like Xero timesheeting, to keep accurate records of employees’ hours and stay ahead of unexpected overtime.
Contractors Vs Employees
Not everyone who works for you is an employee (read Staff Status: Contractors vs. Employees). If you hire independent contractors, temporary employees, or freelancers, they aren’t employees when it comes to payroll. Misclassifying an employee can result in disputes, regulatory reviews and administrative headaches.
Accurate record keeping
Often, payroll complications start with the actual recording of time. Data entry errors can result in underpaying or overpaying an employee. These issues can lead to complicated legal issues if an employee feels they were underpaid or if you are audited. Using systems like Xero timesheeting or Harvest time tracking avoids the inaccuracy of manual time keeping and will save you future Payroll headaches, particularly as your business grows.
Top 8 Payroll considerations for business owners (according to Xero)
Recently Xero blogged about the following Payroll considerations that will help you stay on the right side of the law. Check the out below:
- Statutory maternity or paternity payments – make sure you track leave start and end dates.
- Insurance premiums – ensure the correct employer premiums are taken out.
- Understand any tax exemptions – these may apply to certain pay components.
- Benefit plans – ensure that your employees are offered the benefits for which they are eligible, when they are eligible.
- Statutory holidays and holiday accrual – ensure that you factor in holidays and calculate what’s owed at the end of employment for holidays accrued.
- New joiners and leavers – make sure they are included in the system, with the correct start and end dates.
- Employee expenses – some governments need these to be taken into account as taxable benefits.
- Meet important deadlines – tax payments and reporting to the appropriate government authority is important to get right.
Good payroll software will help you manage all of the above points and more. Accounting software like Xero, with built-in payroll automates most of this, taking care of the tedious detail, so you can get on with running your business.
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