As your business expands and the headcount grows by the day, you are definitely going to need a payroll system to automate your employee payment and the filing of employee taxes. In Australia, the Australian Taxation Office (ATO) updates its tax rules almost yearly. You will therefore need a payroll processing system that is compliant with the latest ATO rules.
One of its latest updates has been the introduction of the Single Touch Payroll (STP) system in the payroll processing by Australian employers. The deadline for compliance with the STP provisions for what are categorized as substantial employers (those with at least 20 employees as at 1 April 2018) is 1 July 2018. That means you will have to choose a payroll provider that is STP-ready to serve your payroll processing needs.
The Single Touch Payroll refers to a new payroll reporting mandate that has been issued by the Australian Taxation Office (ATO). According to the STP stipulations, the employers will need to report the following information to the ATO whenever they pay their employees:-
- The employees’ salaries and wages
- The Pay-As-You-Go (PAYG) withholding for the employees
- Superannuation sent directly from an STP-enabled payroll system
Businesses with 20 or more employees must begin implementing this mandate this year. As a business, you have to factor this in when shopping for a suitable payroll solution. Compliance with the latest regulation should be top on your mind. You’d also want a seamless transition into the new reporting requirements, low implementation costs for your payroll solution and good integration with your current systems.
A good payroll solution will ultimately make your life a lot easier. Here are some tips on how you can select the right payroll solution that will seamlessly integrate into your business systems, minimize disruptions in the business and help you maximize on the ROI.
Is it STP Ready?
This is the topmost consideration for many Aussie businesses implementing the payroll solutions in their businesses at this time. It has to be compliant with the Single Touch Payroll reporting mandate rolled out by the ATO.
When shopping for your payroll solution, make sure it is STP-enabled. Fortunately for many Australian businesses, many local payroll solutions now offer STP integration. If you are a substantial employer, make sure you make this a priority before the 1 July 2018 reporting requirement takes effect.
Consider a Cloud-Based System
These are growing in popularity with many Australian companies looking for more security and scalability in their payroll solutions. A cloud-based system is also advantageous as it is updated in real time so it will be in line with some of the latest rules and mandates such as the Single Touch Payroll reporting mandate without the need to make lots of internal adjustments during implementation. A cloud-based payroll solution also offers you the following advantages:-
- Minimizes the amount of paperwork and time-consuming manual updates.
- Get easy round the clock access to your payroll system as long as you have an internet connection.
- Less delay in accessing or sharing the payroll information.
Robust History Storage for the Payroll Solution
The Fair Work Ombudsman demands that the time and wage records of employees be kept for 7 years in a format that is easily accessible to the Fair Work Inspector. Not only is the employer charged with keeping good records but these records must also be easily accessible for inspection. Your payroll record keeping should cover the following:-
- The weekly time and wage records
- Employment records including the general employer and employee details
- Employment records showing the annual leave record including leave accrual, leave taken and the amount paid.
The best way to keep these records is by having a payroll system with robust history storage functionality. This will help you store all your payroll data in a single location where the integrity of the data is guaranteed. This also comes in handy when the ATO officials or the Fair Work Inspectors come calling. It is also prudent for employers to adopt best practice data storage measures such as data backup as this will make it easier to track all the pertinent payment details of your employees. Having the data can also help you track and correct any payroll mistakes.
Does it have advanced payroll reporting?
With the preponderance of Big Data and advanced data analytics in modern business management, it is advisable to choose a payroll solution with advanced payroll reporting functionality. There is great premium in having greater data analytics capability in your payroll solution. Not only will this align with the need to comply with the single touch payroll reporting obligations mandated by the ATO but it also gives you some useful insights or representations about your business. We live in a data-driven world and advanced data analytics and reporting can be useful decision-making tools. Big Data and analytics can help you gain useful insights about the payroll trends, the nature of your workforce and the overall payroll strategy of your business. This information will come in handy when making decisions on your company’s employee compensation.
Does it provide legal compliance updates?
Given the pace of change in government regulations, it would be prudent to have a payroll solution with vendor-managed legal compliance updates that will help keep your business on the safer side on the regulatory front. Every few years, the government rolls out new rules, regulations or mandates and these will have to be updated into the payroll system. The payroll provider should provide periodic or automated compliance updates in the system so as to ensure your business systems are current on matters tax regulation. When shopping for a payroll solution, check to see if your vendor offers this provision in the product. This will give you an overall peace of mind as you don’t have to dig news pieces to determine if there are fresh compliance requirements that you are missing out on.
Ease of Integration with other systems
Organizations run on multiple automation systems to ensure maximum efficiency and productivity. Apart from payroll solutions, your organization will likely be running an accounting solution such as MYOB or XERO and other enterprise tools such as Enterprise Resource Planning (ERP) tools, human resource management tools, customer relationship management (CRM) tools, payment processing and automated billing systems among others. A good payroll solution should provide seamless integration with some of the core tools to ensure the processes in your organization run as smoothly as possible.
Integration assures you of accuracy in the collection and dissemination of data. When you update one system, the other systems are automatically updated with the same data. This is not only saves the time it would have taken to manually update all systems but it also reduces the risk of errors during data entry. Integration also reduces a lot of system admin and paperwork and this helps in improving the efficiency of the organization.
Payroll processing is also closely related to various human resource functions. Having a payroll solution that seamlessly integrates and communicates with your HR solution can be of critical importance to an organization. The two systems can work in concert to ensure your HR tasks are processed expeditiously.