Question 10 - What Do I Need To Do When I Employ My First Employee?
As a business owner there are a number of issues you need to address when you employ your first member of staff.
Firstly, you need to provide your employees with a Tax File Number Declaration Form and Withholding Declaration. They need to complete the form and return it to you so you can complete the employer section and then remit the original copy of the form to the Tax Office. As an employer you have an obligation to withhold pay-as-you-go tax from your employee’s wages and remit the withholding to the Tax Office every month or quarter.
Employees have the option of completing a ‘Standard Superannuation Choice Form’ that lets them nominate which superannuation fund you should pay their compulsory superannuation guarantee contributions into. You are obligated to pay superannuation on behalf of any employees aged 18 or over where you pay them $450 or more in gross salary in any given month. It doesn’t matter if the employee is full time, part time or casual. Currently the Superannuation Guarantee Rate is 9.5%
If you have employees you also need to pay workers compensation insurance and you should register with the WorkCover authority in your state.
As an employer it’s not compulsory to computerise your payroll, however with the ATO's Single Touch Payroll becoming effective for all employers from 1st July 2019, you will need to have the ability to report to the ATO on a pay by pay basis.
Programs like Xero automatically calculate the amount of tax you need to withhold each pay period and the software will also calculate key figures like your superannuation guarantee obligations and amounts that need to be included on your Business Activity Statement at the W1 and W2 labels.
At the end of the financial year (or if an employee terminates) you also need to provide your staff with a PAYG Annual Payment Summary that lists the gross wages you paid and the tax you withheld on their behalf during the year. Copies need to be submitted to the Tax Office together with an employer annual summary and the payroll programs make this a relatively simple process. We can complete all these forms on your behalf and if you need any assistance regarding employing staff, please don’t hesitate to contact us.
OTHER QUESTIONS IN THIS SERIES:
- What Steps are Involved in Starting a Business?
- Do I Have to Register for GST?
- What Tax Records Do I Need to Keep for My Business?
- What Is a Business Activity Statement?
- What’s the Difference Between an ABN and an ACN?
- Do I have to include GST on my Invoices?
- What Software do You Recommend for My Start-Up Business?
- How Much Tax Do I Pay?
- Can I Claim my Motor Vehicle Expenses?
- What's The Most Appropriate Tax Structure For My Business?
- Are You Small Business Experts?
- How Much Do You Charge?
- How Do I Change Accountants?