Paying Workers
If you are paying workers you first need to determine whether they are contractors or employees
There are significant penalties for getting this wrong so tread carefully and seek assistance if unsure
If employee
Employee types include- casual, part time, or full time
You need to process employee pays using a computerised system eg Xero and report each pay to the ATO using Single Touch Payroll (STP)
Super is payable on gross wages
It is paid quarterly (it must be received by the employees super fund by no later than 28 days after the quarter end)
Tax withholding will be included on your BAS - make sure you set this aside each pay cycle so you don't have cashflow issues
You must register and pay work cover if wages + super exceeds $7,500 per year
You must register and pay VIC payroll tax if wages + super exceed $58,333 per month
Tip: DO NOT pay your NEW employee until they have completed the TFN declaration and provided yu with their TFN and super fund details
If using Xero:
Step1 - Prepare the pay run
Step2 - Pay your employees - pay the Net amount (not the Gross amount)
Step3 - Submit the pay run to the ATO
When reconciling the physical payment allocate it to a/c '804 Wages Payable'
Make sure you check the following items on a regular basis - if unsure speak to your bookkeeper
-make sure a/c '804 Wages payable' is $0 once the physical wage payment has been reconciled
-make sure wages & super in the profit & loss (a/c 470 Wages & a/c 457 Superannuation Expense) agree to the payroll employee summary report
If contractor
Contractors need to provide you with a tax invoice.
You MUST check their ABN is valid before paying them - if they do not have a valid ABN you need to withhold 47% and remit this to the ATO
You MUST check they are registered for GST before paying them GST
You can check their ABN and GST status on the ABR website https://abr.business.gov.au/
Certain industries (eg building & construction) are required to report contractor payments to the ATO each year on a TPAR form. If this affects you make sure you keep good records i.e. ABN, name, address, amount paid, GST paid