Salary sacrifice: A guide for businesses

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Attracting and retaining talent can be instrumental to the success of your business. However, hiring, managing, and retaining employees is no easy feat. Knowing the requirements for tax and payroll compliance is just the start. There are additional benefits you can offer employees to ultimately help retain talent. 

Salary sacrifice is one benefit that employers can offer employees. Salary sacrificing is attractive to employees because they can set aside a portion of their pre-tax wages toward benefits and lower their taxable income. 

Employers with salary sacrifice options can leverage it as an employee benefit to attract top talent. A well-managed and implemented arrangement can create a win-win situation for both you (the employer) and your employees.

This article will cover the ins and outs of salary sacrifices for businesses and its impact on payroll, taxes, and other financial reporting.

What is salary sacrifice?

Salary sacrifice, sometimes called salary packaging, is an agreement between a business and its employee where the employee agrees for part of their pre-tax salary to go towards certain benefits. These benefits may include superannuation contributions, a car, or other non-cash benefits.

Superannuation contributions are among the most popular uses of a salary sacrificing arrangement. Employees agree to have some of their pre-tax income paid into their super account by their employer. This can result in a more tax-efficient way of saving for retirement.

The Australian Taxation Office (ATO) approves salary sacrificing schemes and employees can use them to pay for approved items with their pre-tax earnings. As a result, they may pay less tax on their income.

How does salary sacrifice work?

When an employee agrees to salary sacrifice, the portion they agree to sacrifice pays for benefits they choose before tax. 

For instance, if an employee earns $50,000 per year and sacrifices $5,000 for mortgage payments, their taxable income would be $45,000. The sacrificed portion of the salary goes to home payments before applying tax, which can lower the employee’s overall income tax.

What do businesses usually include in salary packages? 

A salary is the fixed, regular payment made by an employer to an employee. It’s usually a gross annual figure that an employer pays an employee in regular increments (weekly, fortnightly, or monthly). 

On the other hand, a salary package is more than just salary. It includes the base salary and additional benefits that employers provide to employees. These benefits can be either cash or non-cash items. However, common components of a salary package include the following:

Fringe benefits 

Fringe benefits are the additional advantages or bonuses employees receive from their employers, over and above their regular wages. These benefits are not counted as part of an employee’s taxable income but are subject to a separate tax known as the Fringe Benefits Tax (FBT). 

Fringe benefits can take many forms, such as a company car, private health care, fitness club memberships, housing allowances, relocation expenses, travel expenses, and work-from-home reimbursements. Essentially, any non-monetary benefit payment to an employee on top of their normal wage or salary is a fringe benefit.

Exempt benefits

Exempt benefits are a type of fringe benefit that is not subject to FBT. An employer provides these benefits to an employee, separate from their salary or wages. 

According to the ATO, exempt benefits typically include:

  • Work-related items: Portable electronic devices (like laptops, tablets, and mobile phones), tools of trade, protective clothing, briefcases, and calculators.
  • Minor benefits: Items that have a taxable value of less than $300 and don’t qualify as fringe benefits.
  • Relocation: Costs to relocate an employee for work purposes.
  • Emergencies: Benefits that employers provide to employees to assist them during emergencies or disasters. 

Super contributions

Salary sacrificing super contributions means an employer and employee have arranged for the put part of their pre-tax wages into their superannuation fund. This can be an effective tax-effective strategy for employees, especially those with higher incomes. 

The sacrificed component from the pre-tax salary goes directly into the superannuation account and gets taxed at 15%, which could be lower than the individual’s marginal tax rate.

However, there’s usually a cap each year before paying extra tax for excess concessional contributions. The combined total of the employer and employee’s salary sacrificed contributions must not be more than $27,500 per fiscal year.

Also, salary-sacrificed super contributions fall under employer super contributions rather than employee tax contributions. This will affect eligibility for some tax offsets and government benefits, so it’s best to consult a payroll expert and BAS agent.

Other items

Salary sacrificing isn’t just limited to super contributions, exempt benefits, and fringe benefits. It can also include a range of items depending on the employer’s policies and the employee’s personal circumstances. Additional items may include cars, loan repayments, parking fees, or education expenses.

Pros and cons of salary packaging for employers

As an employer, you stand to gain several benefits from implementing a salary packaging program in your organisation. These include:

  • Hiring and retention: Offering salary packaging options can make a compensation package more attractive to potential employees. It can also aid in retaining current employees by providing them tangible benefits that improve their overall remuneration package.
  • Productivity: Employees who feel valued and well-compensated are often more motivated and productive. You can enhance their overall job satisfaction and productivity by providing benefits that directly cater to their needs or preferences.

While this strategy offers a range of potential benefits for employers, it also comes with several challenges, such as:

  • Payroll management: Implementing and managing salary packaging arrangements can increase the administrative load of payroll management. It can involve additional record-keeping, reporting requirements, and ensuring compliance with tax laws and regulations.
  • Compliance: Salary packaging requires following specific tax laws and employment standards. The slightest mistake or non-compliance can lead to legal issues and penalties.
  • Additional short-term costs: Salary packaging can offer tax advantages but also result in additional costs. For example, if the employer provides benefits that attract Fringe Benefits Tax (FBT), this could offset any savings from reducing the payroll tax.
Pros Cons
Improves an employer’s ability to attract and retain employees. Increased administrative burden.
Higher employee motivation and productivity. More legal complexities and potential penalties in case of irregularities.
Potential added costs in case of too many fringe benefits.

What expenses can you include in your salary packaging? 

The expenses you can include in your salary packaging depend on your policies and the specific terms of your employees’ contracts. Expenses could include:

  • Car expenses: Lease payments, fuel, maintenance, and insurance costs for a vehicle used for work purposes.
  • Entertainment expenses: Dining out, holiday accommodation, or event ticket expenses.
  • Household expenses: Groceries, utilities, and rent or mortgage payments.
  • School fees: Payment for private and public schools
  • Insurance: Payment of insurance premiums

Get payroll expertise and support

Salary sacrifice is a strategic tool that can significantly benefit your business and its employees. It can help enhance employee retention, boost productivity, and minimise tax liabilities. 

However, managing salary sacrifice requires expertise and precision, especially regarding compliance with tax laws and regulations.

Visory’s payroll and bookkeeping experts can help you manage the intricacies of salary sacrifice arrangements. Our team can handle the increased payroll management duties, including record-keeping, reporting, and compliance.

Contact Visory today to learn how we can help you maximise salary sacrifice benefits for your business and employees.

FAQs

What does salary sacrificing mean for superannuation contributions? 

Salary sacrificing into superannuation is an arrangement where an employee agrees to forgo a portion of their pre-tax salary. This amount is then paid into their superannuation fund rather than receiving it as cash income.

Payroll management guide for businesses

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Payroll management helps businesses pay employees on time and comply with all tax laws. When done right, your business can save time and money by running payroll efficiently and accurately. However, running it with a gung-ho attitude and a lack of understanding can be time-consuming and fraught with risk.  

Visory helps small-to-medium enterprises (SMEs) improve their financial back-office processes, including payroll services. We’ll help you build a strong payroll workflow and best practices. Our team of experts also manages everything from payroll software migrations to weekly pay runs. 

Here’s what to know about payroll management for your business and how to strategically build a system that works best for your company’s needs.

What is payroll management?

Payroll management is how your business calculates, tracks, and distributes payroll at your company. It can also help you plan and budget for hiring future employees and growing your business. For example, some payroll platforms also include human resource (HR) functions like onboarding new employees or reviewing performance. 

You may use payroll software to manage and automate some parts of the payroll process. But, these tools don’t automate everything. You still need an expert to manage the day-to-day, check for accuracy, and understand your payroll data.  

In general, payroll management includes:

  • Tracking time
  • Preparing pay runs
  • Making employee payments
  • Calculating superannuation
  • Collecting taxes in compliance with government agencies

Why payroll management is important

A well-run payroll management system is invaluable to a company. Without a payroll management system, there may be lost, inaccurate, or late payments, which damages relationships with employees. 

It can also lead to costly and avoidable mistakes. For example, employers need to comply with the Australian Taxation Office’s (ATO) Single Touch Payroll (STP) reporting system. For late STP filings, the ATO has a penalty of $210 for every 28 days it’s overdue. 

The penalty amount caps out at a certain amount though. Depending on your business size and entity, the amount is capped at the below amounts. 

  • Small businesses: $1,050
  • Medium businesses: $2,100
  • Large companies: $5,250
  • Global enterprises: $525,000

With the rollout of STP Phase 2 changes, the ATO may make accommodations for businesses that struggle to meet the new standards by the deadline. But, it’s better to be prepared and compliant, so you don’t have to worry about them. 

On the other hand, strong payroll management can benefit your business through: 

  • Accurate and timely payments
  • Correct payroll taxes and compliance
  • Streamlined pay runs that take a fraction of the time
  • Less time and money spent managing payroll and staff benefits

What payroll management does 

Payroll management includes all the steps to calculate and remit payments to employees and the government. Tasks may include:

  • Collecting new hire payment information
  • Organising and tracking time sheets
  • Calculating employee wages
  • Tracking vacation time, sick time, parental leave, and other leaves
  • Calculating tax withholding and remitting these to the ATO
  • Tracking and collecting retirement superannuation payments
  • Issuing payslips

The payroll management process 

There are several phases in the payroll management process including pay run preparation, calculation, reviews, and processing. Optimising each step in the payroll process can help improve your business in various ways. 

1. Pay run preparation 

Pay run preparation is when you collect all the information you need to run payroll. It can include tax forms at the time of hiring and weekly time sheets. 

Here are some other examples of data you’ll need for pre-payroll:

  • Hours worked
  • Tax information
  • Vacation or sick time
  • Parental leave
  • Employee attendance/absence
  • Superannuation changes
  • Leave requests and returns to work
  • Redundancies

2. Pay run calculations and review

When it is time to run payroll, you must take each employee’s gross pay and calculate deductions to get net pay, or take-home pay. Employers are responsible for withholding tax, superannuation, and other funds in each pay period.

3. Pay run processing

Once calculations are finished, businesses must ensure that all money goes where it is supposed to. This includes issuing payments to employees and remitting tax payments to the ATO. 

It also includes keeping employee pay records. The ATO requires businesses to keep these records for five years: 

  • Employee salaries and wages 
  • Super contributions
  • Employee bonuses and tips
  • Fringe benefits 

Ways businesses can run payroll

How you track and manage payroll at your company often depends on the size and number of employees. In Australia, businesses must use Single Touch Payroll-approved accounting or payroll software. Although software and STP has made payroll easier, it still takes time and expertise to run it accurately and efficiently. 

You can make running payroll easier by:

Outsourcing payroll

Working with an expert to outsource your payroll services can help to make sure that:

  • Processes are compliant
  • Time tracking is complete
  • Pay amounts are accurate
  • Taxes are properly withheld
  • Award rates are updated
  • Superannuation is correctly calculated

Outsourcing options aren’t only for small companies that lack funds to staff an entire payroll department. Companies of all sizes outsource payroll so they can get valuable expertise that can improve their overall business. 

Using payroll software

One of the major benefits of payroll software, other than being a requirement for STP, is that it automates some time-consuming functions. 

At Visory, our payroll experts use a range of payroll software, such as Employment Hero, which integrates directly into our platform. Combined with our payroll experts, you get an efficient and accurate process that keeps your businesses compliant and records all in one place.  

How Visory helps with payroll management

Running payroll is not the most exciting part of running a business. Visory can help you with payroll management so that you have more time to spend actually running your business. When you work with Visory you get paired with an expert who can handle your payroll, bookkeeping, and other finance needs.

As an outsourced payroll service, Visory acts as your back office for wherever your business operates — in Australia or abroad. To learn more, you can take a product tour or chat with an expert to get started.

 

7 best payroll software

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The best payroll software solutions will accurately save you time and money. But with so many options, it can be difficult to know which solution is the best for your business. 

Many businesses outsource their payroll services to Visory, so it’s safe to say our experts have worked with a wide range of payroll tools over the years. This guide covers seven of the current best payroll software solutions for businesses. 

What is payroll software?

Before we dive into our software list, it’s necessary to highlight what payroll software actually is. Why? Because this is unclear for many, and we have seen Microsoft Word and even an instance of Powerpoint being used as ‘payroll software’. 

Payroll software is a digital tool that can automate and manage the process of calculating and distributing employee wages, taxes, and benefits, ensuring compliance with Australian payroll regulations such as STP and streamlining payroll management for businesses. 

Using payroll software can make it much easier to manage employees and pay them accurately. However, it can still take significant time and energy to manage, especially for growing businesses. If you’re looking at payroll software options, also consider outsourcing payroll functions to experts. Technology makes it easier, but there are still many complexities and best practice processes that require expertise to manage. 

Here are some of the best payroll software options currently available for businesses in Australia.

1. Xero

Xero is an ideal payroll software for small businesses that want payroll and accounting solutions in one. It offers various projections and reports, such as automated calculations, taxes, expenses, and outgoing bills.

Xero integrates with many accounting and HR systems, so it’s easy to give your accountant or payroll manager access. It’s also single-touch payroll (STP) compliant. 

xero payroll software

Pros Cons
User-friendly interface Limited support (Live desk help)
Inexpensive for sole traders and small businesses Lack of flexibility to manage annual leave accrual dates separately from employment start dates
Manages both non-GST and GST-registered workers and withholding tax in the same system Primarily an accounting software with some payroll features
Free trial

Pricing: Monthly plans are between $29-$110 AUD

Visory integration: Yes

Best for: Sole traders and small businesses that manage accounting and payroll in one platform

2. Employment Hero

Employment Hero is a versatile payroll software combining payroll, HR, and employee benefits management into a single platform. It offers comprehensive features, including: 

  • Automatic pay runs
  • Payroll reporting
  • Timesheet tracking
  • Leave management
  • Employee onboarding
  • Compliance management 

The intuitive user interface makes it easy to navigate. Employment Hero also acquire KeyPay, so it’s easier to effectively manage your workforce and payroll all in one centralised solution. They’ve also recently introduced AI features that can help automate processes and save time.

employment hero payroll

 

Pros Cons
Free 14-day trial It focuses on HR and payroll, so you’ll need a separate bookkeeping and accounting software
User-friendly
The mobile app assists the employee in requesting time off and tracking pay stubs

Pricing: Plans range between $5- $7 AUD per employee per month

Visory integration: Yes

Best for: Growing businesses that want complete payroll and HR solutions

3. MYOB

MYOB is a comprehensive payroll solution for businesses of all sizes. Notable payroll features include: 

  • Automated pay runs
  • Tax and superannuation calculations
  • Real-time expense reports and budgets
  • Timesheet management
  • STP reporting

myob payroll

With MYOB’s customisability, you can personalise the software to suit your specific payroll requirements, making it a reliable and efficient choice for managing payroll effectively.

Pros Cons
Useful for basic accounting The interfaces isn’t as user-friendly as others 
Easy and quick to extract data
Free trial

Pricing: Monthly plans are between $30 – $170 AUD

Visory integration: Yes

Best for: Growing businesses with many employees

4. Deel

Deel is an ideal payroll software for businesses with global, remote teams and contractors. 

Its features include: 

  • Automated onboarding
  • Time tracking
  • HR management
  • Contractor management
  • Compliance reporting
  • Deduction management

What sets Deel apart is its capability to handle payments for contractors in different countries and currencies.

deel payroll software

Pros Cons
Quick and easy setup Limited invoice customisation
Add-ons available for global payroll Complicated contract templates
Mobile app for employees to quickly access their pay stubs, time off requests, and other information Pricing is per contractor, so the cost increases with workforce size
Only enterprise subscribers are eligible for CSMs
Lack employee support

Pricing: Monthly plans range from $0 – $599 AUD

Best for: Businesses that work with many contractors and global, remote workers.

5. Gusto

If you’re a small business owner, Gusto is an all-in-one HR, payroll, and benefits software you’ll love. It simplifies employee onboarding, time tracking, and automatic tax filing. 

gusto

What’s impressive about Gusto’s payroll software is its flexibility. It can handle payroll for full-time, part-time, and contract workers. 

Pros Cons
Easy to use for employers and employees It doesn’t offer any accounting features
Unlimited payroll runs It doesn’t have billing features
Integrates seamlessly with other software, such as accounting and time-tracking solutions Dedicated support is only available for premium
Basic reports are available in all tiers Ideal for small businesses and startups but not large organisations

Pricing: Monthly plans start $40+ $6 AUD per person

Visory integration: Yes

6. Quickbooks Payroll

Quickbooks is a popular, cloud-based accounting software for small and medium businesses. 

You can send customisable invoices and manage inventory, accounts payable (AP), and accounts receivable (AR). 

quickbooks payroll

Quickbooks is primarily an accounting software. Its payroll solution is actually powered by Employment Hero. 

Pros Cons
30 days free trial Expensive subscription
50% off discounts for the first three months Limited support for lower tiers
STP compliant More of an accounting software than payroll
Easy set up

Pricing: Monthly plans range between $25 – $55 AUD 

Visory integration: Yes

Best for: Sole traders and small businesses with limited payroll needs

7. Paytron 

Paytron is a payroll and bill payment software available in 180 countries and can make payments globally within the same day. It can help you seamlessly manage accounts payable and accounts receivable with workflow automation and approval tools. 

paytron

Other features of Paytron payroll are:

  • Automated invoice management
  • Batch payments for vendors and employees
  • Virtual card management for expenses

Paytron integrates with Employment Hero. You can make payroll payments within a secure encrypted connection with just one click. Small, mid, and large businesses use Paytron, but it’s not a complete payroll solution. 

Pros Cons
24/7 live support  Not a complete payroll software. It helps you make payroll payments.
One-click payroll processing The lowest package has minimal features
Integration with Xero, KeyPay, and Employment Hero

Pricing: Monthly plans start at $125 AUD 

Best for: Managing payments in combination with another payroll software

Best payroll software for your business

Choosing the right payroll software for your business can make paying and managing your workforce easier. It can save time for HR teams and prevent payroll errors.

Evaluating factors such as cost, features, user interface, and integration capabilities can help you decide which is the best option for your business.

If you’re looking for a reliable payroll solution, consider outsourcing your payroll processing to Visory. Certified and vetted bookkeepers and payroll experts provide fast and accurate payroll processing services to businesses in Australia and New Zealand. Whether you’re a small business or a large enterprise, our cloud-based system can help you manage your payroll with ease. Contact Visory today to get started.

Everything to know about small business payroll

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Small business payroll may seem simple at first, but as your payroll needs grow, the process becomes more complex. Although you may view this complexity as a headache, it’s actually a great sign—your business is growing. 

You’ll need more staff and with that, means more payroll tasks and responsibilities. Many small businesses and SMEs outsource payroll services to save time and money. But, understanding how small business payroll works and what you need to do, can help you get started. When it’s time to outsource, you’ll also know what to look for in a payroll provider.

Getting started with payroll

If your business has hired employees before, you’re probably familiar with payroll. However, payroll also involves a lot of moving parts and compliance standards. 

As mentioned above, payroll can become complicated for growing businesses. After all, you have to consider income tax, superannuation, award rates, salary sacrificing, and more to get it all right.

Here are a few core responsibilities and considerations you have when managing payroll. 

  • Hiring staff as an employee or a contractor – you’ll need to run payroll for employees where contractors invoice for their time. 
  • Records you need to keep – you’ll need to record personal information, track awards rates, hours worked and more. 
  • Payroll withholdings – are you meeting superannuation guarantees, income tax, HECs repayments and other payroll requirements?
  • Type of payroll software to use – Using the right software helps you automate time tracking, meet compliance standards and integrate with your existing accounting software.
  • Payroll services – outsourcing payroll to a trusted third party can save you time and money while making sure you meet compliance requirements.

In addition to these basic requirements, you’ll also need to be aware of payroll compliance.

Requirements for payroll compliance

To operate a business in Australia, you need to maintain compliance with payroll regulations. For example, there are several National Employment Standards (NES).

They include:

  • Flexible working arrangements – Employees may request flexible working arrangements after working with the same employer for at least one year. 
  • Maximum hours – Full-time employees have 38 working hours plus reasonable additional hours. 
  • Parental leave – Employees with a newborn or adopted child have up to 12 months of unpaid leave. If the employee chooses, they can request an additional 12 months of leave. 
  • Annual leave – All employees must receive at least four weeks of annual leave, and for some shift workers, it’s five weeks. This requirement doesn’t apply to casual workers. 
  • Personal or carer’s leave and compassionate leave – This gives employees 10 days of paid leave, two days of unpaid carer’s leave, and two days of compassionate leave. However, casual workers are unpaid. 
  • Public holidays – Employees get paid days off on recognised public holidays.

Along with NES, small businesses must also keep employee payroll records and payslips. To be compliant, you must keep records for up to seven years. You also need to send and maintain payslips to show you’ve paid the right wages and entitlements.

Payroll withholding and taxes

Employers must withhold income taxes from their employees’ paychecks. The rate at which you’ll need to withhold income taxes largely depends on the amount of money each employee earns. Find more details on income tax rates in Australia below. 

Moreover, Australia charges employers who pay $6.5 million or less in taxable wages a 4.75% payroll tax. Companies that pay more than $6.5 million pay a 4.95% payroll tax. 

Income taxes

Australia’s national income tax rates range from 0% to 45%, depending on the amount of income the employee generates. Here’s a breakdown of the typical tax rates:

Annual Income Taxes
Up to $18,200 0%
$18,201 – $45,000 19%
$45,001 – $120,000 32.5%
$120,001 – $180,000 37%
$180,001 and over 45%

How to pay payroll taxes

To make payroll tax payments to the ATO, you’ll need to register your PAYG. Once you do, you’ll be able to make your payroll tax payments online. Keep in mind that you’ll need to regularly make your payments and report the payroll taxes you’ve withheld from your employees. 

Other tax considerations

There are other considerations to think about when handling your small business payroll. After all, income tax isn’t the only part you’ll withhold. 

You’ll also need to withhold superannuation—a required portion that goes toward retirement. It’s at least 10.5% of each employee’s gross income, but it’s much more complex than that. Most of the mistakes that businesses make when doing their own payroll are related to superannuation, so it can be worth seeking an expert.

Tips for setting up and managing payroll

Your business is growing and you’re ready to make your first hire. Before you do, you’ll need to set up your payroll. Here’s what you’ll need to get started:

  • ABN – As an employer, you’ll need to get your Australian business number or ABN. If you already have one, you’re one step ahead. 
  • PAYG – Next, register for pay-as-you-go withholding, also known as PAYG. 
  • Gather employee information – You’ll need your employee’s Tax File Number (TFN) as well as their superannuation and bank details.

1. Register your ABN and PAYG withholding

Before you hire your first employee, you’ll register your ABN with PAYG withholding. This is where you’ll pay the money you withheld to the Australian Tax Office (ATO). 

2. Collect employee information 

Next, be sure to collect your employee’s information and check that information for accuracy. You’ll need:

  • Identification – You need to verify your employee’s identification. Be sure to make a copy of their identification card for your records. 
  • TFN – You’ll also need your employee’s Tax File Number (TFN). 
  • Superannuation and bank details – Finally, you’ll need to get your employee’s Superannuation details as well as their bank details. 
  • Withholding declaration – This authorises you to adjust the amount of tax withheld from final payments.
  • Medicare Levy declaration – This will impact payroll as an additional tax on employee income that you may need to pay

3. Use single-touch payroll

The ATO incorporated single-touch payroll (STP) in 2018 to find businesses that aren’t paying their employees correctly and improve tax reporting efficiency. 

To use single-touch payroll, your accounting or payroll software will need to integrate with a Transport Provider. From there, the Transport Provider securely sends the required data to the ATO in the STP format. 

4. Choose the right payroll software 

There are several different types of payroll software available. The software you choose will determine if payroll is a simple process or a constant source of headaches. When you choose your software, consider regulatory compliance, the tools the software has to make your life easier, STP capabilities, and other integrations. 

Visory integrates with a range of major industry software for payroll services. However, it’s important to note that software is only one part of doing payroll. Sure, it can make the job easier, but it doesn’t automate the payroll process. A payroll expert should still review your records to make sure it’s accurate. 

5. Leverage payroll services 

When it comes to managing payroll on time and accurately, it’s wise to work with an outsourced payroll service provider. A payroll provider will make sure your payroll process is compliant and accurate. They’ll free up time for you to focus on more important areas of your business and reduce the risk of future issues.

Your business is growing, and with that comes a need for a better payroll process. Bookkeepers also often provide payroll services, and with the right provider, you can get bookkeeping and payroll all in one. If you’re ready to get help managing your payroll, find out how Visory can help.  

 

What’s the Difference Between Payroll and Bookkeeping?

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No business gets far without sound financial infrastructure. Up-to-date and accurate payroll, bookkeeping and accounting practices help set the foundation of a successful business. So, it is important to understand the difference between payroll and bookkeeping and how, along with accounting, they contribute to your financial health. 

Software has simplified parts of the process, but it has not fully automated bookkeeping, payroll, and accounting tasks. Whether it’s an error preparing payroll payment register summaries or distributing payslips, any glitch can throw financial records off, so it’s important to hire the right expert.

Although many bookkeepers do payroll, by no means are all bookkeepers payroll experts. At Visory, we have a separate payroll team taking over these responsibilities. 

In this guide, we’ll go over the basics of payroll, bookkeeping and accounting. We’ll outline the tasks each may do, and the role each plays in your business. 

What Does a Payroll Expert Do? 

Payroll is the process of verifying and distributing payments to employees at the agreed rate and in accordance with designated award rates. The process might appear straightforward and easily automated, however, it’s an easily tangled process that can require skilled financial experts as well as Human Resources to ensure it is completed without issue.

Payroll Tasks

The tasks that a payroll expert completes may vary slightly depending on if you’re outsourcing payroll or hiring in-house. It also depends on the details of your service agreement. However, these are a few of the common tasks and responsibilities. 

  • Make sure all payroll transactions get processed efficiently and at the correct times
  • Calculate, collect, and record data to manage and track payroll information and balance sheets
  • Compile summaries of earnings, deductions, disabilities, taxes, benefits, leave, and non-taxable earnings for financial statements, audits, and more
  • Resolve payroll discrepancies
  • Follow regulatory payroll policies and procedural operations for compliance
  • Manage PAYG withholding
  • Reconcile payroll tax 
  • Set up single-touch payroll
  • Note total gross award rates of the payment register YTD report
  • Contribute to superannuation funds on behalf of employees
  • Implement ad hoc operational and financial reporting as required

Payroll Checklist

To keep payroll accurate, businesses need to collect and confirm employee details like those listed below. 

  • Have confirmed employee details
  • Legal name and address 
  • Date of birth 
  • Tax file number
  • Start (and termination date) of every employee
  • Details of account they want used to receive wages
  • Track pay details such as allowances, gross wage, hourly award, etc.

What a Bookkeeper Does

Bookkeepers manage many of the everyday financial needs of a business, from tracking cash flow and reconciling your accounts to updating your books and creating standard financial reports. 

Although bookkeepers are not the same as accountants or payroll experts, occasionally, a bookkeeper may perform some payroll or accounting tasks. Although, it is important to note that performing actions like lodging a tax return requires additional certification, such as becoming a BAS agent. If you’re considering hiring a bookkeeper, consider what types of tasks you need and their area of expertise. 

Bookkeeper Tasks

Here are a few common tasks bookkeepers may handle.

  • Pay suppliers, vendors, subcontractors, etc.
  • Produce, record, and track invoices for provided services or goods sent to clients
  • Bank reconciliations
  • Document customer receipts
  • Prepare financial reports like balance sheets 
  • Manage accounts receivable and payable
  • Track depreciation

What’s the Difference Between Payroll and Bookkeeping? 

Although a bookkeeper may complete some payroll functions, the two roles are different. Now that we’ve covered each in detail, let’s look at how they differ. 

In their most basic form, payroll and bookkeeping are different because they manage different functions within an organization. 

  • Payroll: The process for paying and managing award rates to staff.
  • Bookkeeping: The day-to-day management of the company’s finances.

Accounting is also sometimes used interchangeably with payroll and bookkeeping. It is key to understand these differences as well, especially if you are considering hiring an expert to help you with your business finances. 

What an Accountant Does

Accountants are advisers who produce financial reports and offer financial advice. They prepare tax returns and ensure taxes get paid on time and properly. So that the business is stable, accountants evaluate operations and recommend best practices, spot issues, and develop solutions to help the organisation run more effectively.

Accountant Tasks

Here is a brief list of many tasks an accountant might be responsible for daily.

  • Ensure the accuracy of the company’s accounting tax records
  • Make sure any financial transaction complies with relevant laws and regulations such as the Corporations Act
  • Prepare, report, and maintain important financial reports
  • Put together tax returns and see that taxes get paid properly and on time
  • Offer counsel on revenue enhancement, cost reduction, and profit maximization
  • Assess forecasting and risk analysis 

Why You Need Payroll and Bookkeeping Experts

An error in your financial records can impact your entire operation and knock the business off its game. A skilled bookkeeper can help you strengthen your business acumen, whether that be choosing the right bookkeeping software or analysing your financial data to identify areas of growth. 

With Visory, you can be confident that your bookkeeping and payroll system is efficient, effective, and agile.

As professionals, we know small errors turn into large problems so we scrutinise every line to ensure accuracy. 

Whether you are an international enterprise or a growing business, managing payroll and bookkeeping on your own can feel like a daunting task. Visory’s team of experts understands the differences between payroll and bookkeeping and can help you assess what your business needs. If you’d like to learn more about identifying the best ways to improve back-office practices, contact Visory today.

Benefits of Using Outsourced Payroll Providers

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Outsourcing your payroll involves working with a third-party provider to streamline your payroll tasks and process. Outsourced payroll providers leverage expertise and technology to help you complete these tasks quickly and accurately.

You don’t have to manually work out the calculations or handle the administrative activities yourself. Outsourcing simplifies the process to reduce the stress associated with payroll tasks. 

To decide whether payroll outsourcing is right for you, let’s dive deeper into the benefits of using outsourced payroll providers in your business. 

Top 6 Advantages of Using Outsourced Payroll Providers

Using outsourced payroll providers in your business has dozens of benefits. But here are the top six. 

1. It Can Save Time and Boost Productivity in Your Business

Regardless of the number of employees in a business, payroll tasks can consume a great deal of time. For example, you must accurately track employees’ benefits, deduct applicable taxes, and send payslips to employees. Considering that you have other business activities, these tasks can be tiresome and time-consuming. 

However, outsourcing payroll processes to a reliable third-party provider leaves you with less work. As a result, you get extra time to focus on strategic tasks that take your business to the next level. For instance, the time and effort you’re using right now in payroll procedures can be re-channelled to streamline customer service and improve your business’ online presence. 

2. It Can Reduce Labor Costs 

Giant enterprises have the financial power to maintain reliable payroll departments. However, in-house payroll procedures are a money burner for small/medium-sized businesses. If you outsource, you can save a lot of money. Here’s a quick comparison you should do right now. 

Identify how much you spend on employees who handle payroll-related activities. Then, compare the amount with the pricing plans of an outsourced payroll provider to see how much you’ll save. 

3. You’ll Reduce Compliance Risks in Your Business and Potentially Avoid Paying Penalties

According to the Australian Taxation Office, as an employer you are responsible for taking care of your annual tax liabilities. Otherwise, your business may face penalties for neglecting legal obligations. The penalties often come from calculation errors, failing to file payroll tax statements on time, and deducting less than the law requires. 

Small business owners are susceptible to these mistakes because they aren’t experts in the world of complex and ever-changing tax regulations. The good news is that outsourced payroll providers can help you stay on top of tax requirements. 

After all, they have the skills, resources, and experience to calculate values accurately and file taxes on time. Eventually, you comply with government regulations and potentially avoid penalties that hurt productivity in businesses. 

4. You’ll Gain Access to Advanced Technology

With outsourced payroll service providers, you can access powerful technology that takes your business to the next level. For example, reliable third-party providers use robust payroll software programs, bookkeeping applications, and Human Resource Information Systems to offer multiple solutions.

As a result, you eliminate technology advancement costs in your business. You’ll forget the hassle of frequently updating payroll software applications to the latest versions. Even better, you’ll avoid regularly adjusting in-house technology to fit the most recent payroll tax tables. 

In short, third-party providers have the modern tools you need to keep your payroll running smoothly. 

5. It Improves Data Security in Your Business

Statistics say that 43% of cybercrimes target small businesses. That said, how safe is the payroll data in your in-house computer network? Do you have sufficient resources to future-proof your technology against malicious cyber-attacks? 

Outsourced payroll providers place measures that secure your payroll data against cybercriminals. For example, they use backup technologies and multiple server locations to streamline business operations in case of a cyber breach. Third-party providers also leverage powerful anti-malware technology to detect unethical activities before they bring disaster to your business. 

6. You’ll Access Accurate Reports for In-House and Accountant Use

Small businesses usually have less time to focus on payroll tasks, increasing the chances of mistakes. Outsourced payroll providers give you access to a reliable team that solely focuses on streamlining payroll tasks to enhance accurate reporting. With accurate reports, you can make data-driven business decisions. 

How to Choose an Outsourced Payroll Provider

You need to consider the following factors to help you choose the right payroll service provider. 

How Accurate Is the Outsourced Payroll Provider? 

Accuracy is a crucial factor when choosing a payroll provider. After all, what’s the point of paying for services causing wrong payroll tax calculations and inaccurate employee wages? 

Make sure you only partner with a skilled and experienced third party. Check the provider’s existence period in the industry, the methods they use to handle your payroll, and customer reviews (or case studies) on their websites. 

Does the Payroll Provider Offer Customised Packages? 

Basic payroll packages may work for now, but what happens when your business grows? The truth is that your compliance and payroll needs increase as your organisation grows. Therefore, you need a personalised payroll services package that grows with your business. 

Does the Payroll Provider Guarantee Data Security? 

Payroll data is super sensitive since it entails personal information. For this reason, ensure the third-party payroll provider has stringent cyber security policies put in place. 

For example, you need a payroll provider with data-backup solutions to avoid downtime in the case of a cyber breach. 

What’s the Cost of Hiring the Payroll Provider? 

Payroll outsourcing costs less than hiring an entire in-house team. However, ensure the provider doesn’t have any hidden charges. 

Why Outsource Your Payroll Processes to Visory? 

At Visory, we combine data, business processes, and people to bring you the best payroll services. The following factors make us stand out in the industry. 

  • We offer secure payroll services in Australia and abroad. Our cloud-based platforms operate under stringent cybersecurity measures to ensure your payroll data is safe. Our skilled professional team also manages your payroll to avoid data breaches. 
  • We reliably handle all your payroll tasks. That way, you get extra time to focus on core business activities that increase profit in your business. 
  • Accurate reporting. Calculation errors are the primary cause of payroll-related penalties. Our payroll experts are here to help eliminate errors and increase accuracy in your payroll tasks. 
  • Our prices are affordable. Each package we offer is only a fraction of the cost of hiring an entire in-house team. Plus, we have a custom pricing plan that ensures you only pay affordable prices for the services you’ll get. 

Learn More about how Visory can save you time and take your payroll process to the next level.

Why You Should Outsource Your Payroll Process

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An expanding organisation outgrows many things over time. This might include working out of your home, printing your own adverts, and handling your own payroll processing. You can save a lot of time and energy by handing over your payroll to a trusted partner. 

Once you’re large enough, you may be able to create an entire in-house payroll department. But what about that stage where you don’t have the resources for full-time payroll staff but can’t keep asking executives to cut cheques? You outsource payroll. 

Let’s talk about the benefits of outsourcing your payroll service, and what virtual bookkeeping for professional services looks like in practice. Spoiler: tax time will be easier. 

How Does Payroll Outsourcing Work?

Before you entrust someone else to run payroll for your business, you want to know what they can handle. A virtual bookkeeping service may be your best option. You’ll have access to an experienced team that can tailor their services to your exact needs. 

When you outsource payroll, you’ll either give your contractor access to your payroll software or allow them to set it up for you. You’ll never have to worry about late paychecks again. 

Which services do payroll outsourcing providers offer?

It’s easy for a payroll period to sneak up on you. And if you enter tax information incorrectly, both you and your employee could be in some trouble at the end of the year. When you hand over payroll to a partner, they can:

  • Make sure the correct taxes are taken out. You and your employee will appreciate an accurate accounting of payroll taxes when it’s time to lodge your returns. 
  • Get forms signed. When a new employee comes on board, it’s important to get their documents sorted promptly and correctly. Your outsourced payroll partner can tackle these details. 
  • Handle benefits. If your employee takes a sick day or paid time off, you can trust your virtual payroll service to properly note it. 
  • Track time. If your staff are required to track their time throughout the week, a payroll service can handle it. Then, they translate the hours to the appropriate paycheck. 
  • Send funds. Perhaps most importantly, your payroll source can become accounts payable, ensuring that all employees are paid on time each pay period. You won’t have to rush to send off direct deposit money or paper cheques again. 

Benefits of Outsourcing Your Payroll Process

There are many reasons to outsource payroll. Maybe you’re just not great with numbers or you are becoming overwhelmed with other aspects of your business. While you’re seeking help with

online bookkeeping, it makes sense to sign up for payroll services. Here are just a few of the benefits. 

Save Time and Energy

You will have more time to focus on research and development, marketing, hiring and a host of other vital activities with payroll off your plate. You may not realise just how much of your energy is going toward calculating benefits and dealing with running payroll until you let someone else take over. 

Minimize Payroll Mistakes

Payroll mistakes can leave your employees in the lurch — a late payment could mean they can’t pay their bills. On the other hand, overpaying or forgetting to add vacation time could cost your company money. Financial mistakes are never good. What’s more, a mistake that doesn’t get corrected once could continue each pay cycle, including incorrect tax deductions. Leaving payroll to the pros will reduce the number of errors. 

Improve Your Data Security

Your employees entrust you with sensitive information, including bank details, when they submit payroll documents. When you outsource payroll you can increase peace of mind. Payroll experts know how to guard important personal data. 

Reduced Costs

Payroll mistakes can get very expensive. So is hiring someone full time, especially if you are still a small-to-medium size business. Paying a contractor may be a more cost effective way to get your payroll done promptly. 

Help Filing Payroll Taxes

Your payroll contractor can also ensure that your taxes are lodged the right way. This can mean you avoid fees during tax time and save your employees from explaining why they underpaid. Tax rules change often; you won’t have to stay on top of the tax code when you have an expert on the case. 

Maintain Compliance

Payroll assistance also keeps your business compliant with any financial reporting or payroll laws for your industry. Regulatory compliance may be required at the state or national level. Hand it over to your outsourced payroll provide so you don’t have to make heads or tails of complicated compliance rules. 

When is it Time to Outsource Payroll?

If any of these signs sound familiar, it may be time to get some help with your payroll. 

  • You are growing as an organisation. If you’re the founder of a company, it’s natural to outsource services as you scale up. 
  • You missed a payroll period. If you’ve ever gotten so caught up in other work that you forgot to pay an employee, you should call in reinforcements. 
  • Your finances are becoming complicated. Whether due to growth or other causes, if your accounts receivable is already keeping you up at night, why not take payroll off your plate?
  • You are hiring for the first time. You may have a small trusted group of people in your company for the first several years. As you hire from the outside to add to your team, you should also bring on a payroll pro.

Deciding to outsource payroll is a wise move for many businesses. Whether you are growing as a company or just confused about tax deductions, an outsourced payroll professional will be a lifesaver. You can focus your attention on things like marketing and rest easy knowing your paychecks are going out like clockwork. 

A company like Visory will pair you with a team of payroll experts. They will know your industry and allow you to add more services as needed. Before you know it, your outsourced payroll team member will be a trusted extension of your company.

Top 10 Benefits of Outsourcing Payroll

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For an expanding organisation in Australia or New Zealand, growing payroll needs can cause headaches. Are you applying the right tax rate? Is your software able to scale? Are you compliant with government regulations? One misstep, and soon you’ll be buried in some serious paperwork or worse—you might miss a pay period. Fortunately, there are financial experts who can help you handle payroll. From paying employees to setting up new employee accounts and remaining government compliant, a trusted payroll partner can shoulder the burden of your payroll process, so you don’t have to.  The benefits of outsourcing payroll can’t be understated. 

Here are 10 reasons to call in reinforcements for your payroll systems. 

Benefits of outsourcing payroll

Time savings

When was the last time you assessed how long it takes to process your monthly payroll? Even when the system is streamlined, your staff has to keep on top of paid time off, sick days, paid bonuses, and tax changes. An outsourced team of managed payroll experts frees up your back office to worry about other things. 

Government compliance

Payroll taxes and thresholds vary based on state or territory, as do the required deductions in New Zealand. For instance, do you know the appropriate non-notified tax rate in New Zealand for an employee that does not provide a completed IR330? Spoiler: It’s 45%, but you could run into compliance issues if you miscalculate it. You’ll save money in the long run when you remain in compliance with tax regulations. 

Money savings

You won’t only save money on avoided compliance penalties when you outsource your payroll needs. The benefits of outsourcing payroll also include saving on overhead costs. When you don’t have to shoulder the on-costs of a full-time payroll expert in-house, you can use that cash for product development and more. 

Security

Your payroll system includes the sensitive data of your staff. Should the system ever be breached, identifying information could be stolen. There is frankly tonnes of risk in handling payroll as a side project as your business grows. A trusted payroll company will have the digital infrastructure needed to keep your information safe and sound. 

Team of experts

The skills required to be a payroll officer vary. It helps for a person to have a degree in finance, but at the very least, they must be comfortable with both maths and communication. A payroll officer not only processes all payroll transactions but also updates payroll systems, calculates employee income, handles Jobseeker payments, generates financial reporting, clears discrepancies, and more. Having a whole team on your side means you don’t have to search far and wide for the perfect employee. 

No risk of losing staff

Speaking of finding an ace employee—what happens if you find one, train them, and then they leave? You’re back at square one. Outsourcing with Visory means you always have payroll support without fear of losing your payroll pro unexpectedly. 

Save on software and infrastructure cost

Accounting and payroll software can be expensive. Plus, your software can’t do everything for you. You’ll still need to ensure you’re using the proper tax tables and the software is applying the most modern government compliance standards. One of the benefits of outsourcing payroll is that your new team will always invest in the most up-to-date payroll software so you don’t have to. 

Eliminate paperwork

Outsourcing payroll also allows you to eliminate heaps of paperwork. Not only is this more convenient and efficient, but it can help reduce the chances of fraud. Outsourcing your payroll means you aren’t responsible for the paper trail of payroll; someone else saves all the documents for you. 

Simplify HR

Right now, you may have HR handling payroll along with hiring, firing, and planning business events. When you take payroll off their plate, you allow HR to specialise in what they do best — managing your employees’ needs and interviewing candidates. Visory will act as an extension of your HR department, fielding the questions your HR team has historically been inundated with. 

Peace of mind

Outsourcing payroll adds up to one conclusion: More peace of mind. You have one less thing to worry about and never have to fear leaving your staff in the lurch because you failed to process their pay on time. You can focus on growing your business, not running payroll.

Visory is here to meet your payroll outsourcing needs. Between the added security and compliance consistency, you’ll be glad you paired with payroll pros. Sign up today to learn what we can do for your organisation. 

 

Single Touch Payroll – Are you compliant?

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The Australian Taxation Office (ATO) introduced Single Touch Payroll (STP) to improve payroll processes and reporting for employers. Meeting payroll compliance standards can be challenging for businesses, especially when it comes to more complex tasks like superannuation. 

In the past, some businesses relied on paper reporting, making it more difficult. STP reporting changed that and standardised payroll reporting with approved software.

STP reporting began on 1 July 2018, and the mandatory start date for STP Phase 2 reporting started on 1 January 2022.

It’s now a regular part of running a business and paying employees. All Australian businesses need to use Single Touch Payroll. 

You can set STP up with accounting software or have a payroll services provider like Visory do it for you. In this guide, we’ll cover all you need to know including: 

  • What is Single Touch Payroll
  • How Single Touch Payroll changed payroll reporting
  • What information do you need to send the ATO?
  • Key payroll dates 
  • How Single Touch Payroll works with Visory

What is Single Touch Payroll?

Single Touch Payroll is the digital payroll reporting system that the Australian Taxation Office created. Through it, businesses report employee information directly from their STP-enabled accounting software. 

This streamlines the process of submitting payroll information to the ATO. Employers send their data, including salaries, wage deductions, and superannuation contributions, at the same time they pay their employees. Overall, STP aims to simplify payroll reporting and compliance.

How Single Touch Payroll changed payroll reporting

With the previous payroll reporting framework, many employers didn’t meet compliance standards. Xero estimated that 1 in 5 Australian businesses use pen and paper for payroll record-keeping purposes. 

With the introduction of STP, there are no more paper forms for payroll reporting—businesses must use software. The STP was meant to help improve payroll processes and compliance by moving employers to one, cloud-based system of reporting.

Even with STP, businesses still need to be conscious of  PAYG Withholding and Super Guarantee (SG) as compliance is not guaranteed.

Payroll reporting can change, and it can be difficult for business owners to keep up. While in July 2018, only employers with 20 or more employees needed to use the STP system, STP has extended to all Australian businesses. In 2022, with the introduction of STP 2, the Australian government changed reporting requirements again.

What information do you need to send the ATO? 

To be compliant with Single Touch Payroll, businesses must send the ATO information about their payments to various parties, including employees. 

Businesses must include the following payments, as well as any amounts withheld from them, in STP reporting:

  • Employee payments like salary and wages
  • Termination or redundancy payments
  • Return-to-work payments
  • Unused leave payments
  • Parental leave pay

For a complete list, consult a payroll expert or refer to ATO’s STP guidelines. When reporting payroll to the ATO, employees must submit payment information for: 

  • Full-time and part-time employees
  • Remote workers based overseas
  • Absent employees (paid or unpaid)
  • Employees on leave (paid or unpaid)
  • Closely held payees (shareholders, directors, etc.)

If you make any mistakes while doing STP reporting, you have 14 days to correct the error. The exception to this is if your pay cycles are longer than 14 days. In that case, you’ll need to correct the mistake before you make the next round of payments.

Key payroll dates 

At the end of every fiscal year, employers must notify the ATO when they pay the final paycheck of the year. This finalisation declaration informs the government that your business fully reported payments for the financial year.

The deadline to submit the finalisation declaration is 14 July. 

How Single Touch Payroll works with Visory

While the Single Touch Payroll system simplified the payroll reporting process, businesses still struggle with compliance issues. Plus, running payroll is one of the most important, but least exciting tasks for many businesses. Many businesses outsource payroll for these reasons. 

If you want to outsource your payroll to Visory, so you can focus more on growing your business, it’s easy to get started. The first step is to reach out and let us know which services you’re interested in—payroll, bookkeeping, accounts payable and receivable, or other financial services. 

If you aren’t sure which services you need, we can also help you narrow it down and identify which ones make sense for your business. 

Next, you’ll set up a time for a Discovery call with a Visory expert. During this chat, a Visory customer success manager will get to know your business, industry, current payroll process, and other financial needs. 

Based on your chat, we’ll make recommendations and create a tailored services proposal with pricing. Your customer success manager will follow up then to answer any remaining questions and start your onboarding process.

Your assigned payroll specialist will work closely with you to guarantee that your payroll processes are compliant with industry and government standards. They’ll handle tasks like managing STP reporting, award rates, leave accruals, and more. In the meantime, you can devote more time to other areas of your business.