So business is going well and it’s time to employ staff. As an employer, there are a number of things you need to do throughout the year to meet compliance requirements.

BLOG - HINTS AND TIPS FOR A FIRST-TIME EMPLOYER

Before you do anything, you need to:

1. Familiarise yourself with your industry’s ‘Modern Award’ – a guide to the minimum salary and employment conditions you must abide by

2. Choose a Default Superannuation Fund. This simply means that if a staff member doesn’t provide you with their superfund details Add Onsor they don’t have one, then this is the fund that’s used for your business… by default (call the fund and "register as an employer").

You’ve found the right person for the job. Next give them two forms to fill in and return to you.

1. The Tax File Declaration form enables you to:

a. Collect their personal details

b. Find out their tax withholding requirements – e.g. do they have another job, are they an Australian resident etc? Having this info ensures you withhold the right amount of tax. Get this wrong and you could find yourself in some bother

2. The Superannuation Choice Form

a. Your new employee uses this form to provide you with their Superannuation Fund details. If they don’t have one, they can also use this form to sign off on using your default fund (your default fund details should be on this form)

b. Create your own template of this document (with your default fund info) and use it every time you hire someone

The day-to-day

1. You need to provide your staff member with a payslip for each pay period by law. The easiest way to do this is by using your bookkeeping software and then via email. It will show them their wages amount, tax withheld, Super paid and leave accrual and balances

Compliance & Lodgement

1. Withholding Tax (PAYGw): For each BAS period, you will need to report your total gross wages (before tax number), as well as the total tax withheld. You pay the tax withheld to the ATO on behalf of your employee. Withhold too much and they get a tax refund. Withhold too little and they’ll get a tax bill. Assuming it’s been set up correctly, your software will calculate the required amount of tax for you.

2. Superannuation Guarantee: As an employer, you must pay 9.5% Super in addition to their wages. This is known as ‘Super Guarantee’ and is calculated on the employee’s gross (before tax) wages. You must:

a. Pay this each quarter at the same time as your BAS. If you don’t, there will be a loss of the tax deduction and penalties

b. Report the payments in accordance with recent Superstream reforms

Best Practice

To ensure the terms of employment are clear, it’s important to provide your staff with a contract/terms of employment document. This document will include things such as Minimum ordinary hours, overtime, and allowance and leave entitlements, probationary periods, lunch breaks, remuneration, OH&S and how to access your business policies & procedures. This document should be signed as acknowledgment by your staff.

Tools of the trade

1. A number of cloud software packages can make it easy for you to look after your staff. Bookkeeping software such as Xero will allow you to record timesheets, calculate tax and Super for each pay – and it automatically knows what rates of tax and Super apply

2. There are also a number of HR packages that allow you to manage all aspects of HR, from employment to employment contracts, sick notes to performance reviews, award rates etc.

Conclusion

Employing new staff is all part of a company’s growth and a natural transition in developing your business. In fact, I’d go so far to say it’s the most important part since staff can make or break your business success. Contact us for more information on how to manage this transition.

@TomParkerCPA

I am passionate about all things small business. I do what I do to make a real difference. My goal is to break the mould of the ‘typical’ accountant and move our profession more towards one as a proactive business advisor for small business owners looking to learn, develop, succeed in all they do.