australian taxation

If you are currently setting up or are looking to set up a business in Australia with only a few employees, then it is best to start with good information about payroll processes. Following the proper protocol when it comes to payroll is one of the essential regulatory requirements for getting your business off of the ground.

Employers with four or fewer employees are known as “micro employers” in the parlance of the Australian Taxation Office. There are some general but also some specific considerations that you need to be mindful of if you are a micro employer. While payroll software can help greatly to simplify the process of reporting and processing your payroll information, it is important to have a general understanding of the basics for your own information.

Let’s explore what payroll processes and guidelines look like for businesses with four or fewer employees.

PAYG Withholding

Pay As You Go (PAYG) withholding registration is an essential task to check off as a small business in Australia. This is the money that you will pay to the Australian Taxation Office in anticipation of your tax bill at the end of the fiscal year. Having this money taken out of your income each period is not only important for keeping up with your liabilities, but it will also help you to keep organised and better manage your cash flow.

Register For Payroll Tax

Payroll tax is another thing that Australian business owners are required to both register for and pay. The specifics of this tax will depend on the state that you are operating in with a certain exemption threshold. For employers with four or fewer employees, you may not be large enough to have to pay this tax. It is important that you check with the tax office in your state to clarify whether this applies to you or not. 

Work Cover

One of the other things that many Australian businesses must register for is Work Cover. This is a worker’s rehabilitation and compensation safety net program that exists in most of Australia’s states. Even if you only employ four or fewer workers, you will need to contribute to this fund. On the bright side, this money is used for compensating workers who are unable to work due to injuries or major illnesses. As a socially-minded employer, you need to do your part and contribute to programs that are important for the well-being of the country.

Single Touch Payroll Requirements

Since July 2019, all Australian businesses, including those with four or fewer employees, have been required to participate in the single touch payroll (STP) system. Under this program, employee information related to payroll, including salaries, wages, PAYG withholding and superannuation, is submitted directly to the Australian Taxation Office for every pay period.

Complete The Steps And Start Your Business

While these registrations and payroll systems may seem convoluted and complex, there is a logic behind all of the programs you must register for. Make sure that you take the time to complete each part of the process carefully. Payroll is one of the most important processes for ensuring the success of your business. Not only will your employees expect that you have the details ironed out, but the ATO expects that you will regularly report the details of your employees’ information. 

To make the process easier on yourself, be sure to invest in some contemporary payroll software. Updated technological tools such as these can go a long way towards saving time and ensuring that your payroll information is completely accurate.

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