Payroll process is a critical component of your business. It maintains the confidence of your employees in the business financial stability. As a business owner, it centralizes your employees’ data in one place – taxes, benefits, insurances, etc.
If you are struggling with administrative resources, outsourcing payroll process might be your best option. Outsourcing this area provides these benefits to your business:
Access to expert’s knowledge
Doing payroll involves understanding complex compliance rules. For example, calculating FBT depends on the type of benefit your employee has. You also need to consider the new concessions and rulings the ATO implements.
Staying on top of your obligations while running your business is challenging. When you outsource payroll process, you are expanding resources to meet your obligations. Payroll experts keep their knowledge up-to-date to stay compliant with the ATO.
Maintain accuracy in STP2
Before the STP2 implementation, most pay items are grouped and reported as “gross”.
The STP2 has 36 separate reporting labels with specific taxation and super profile. This change also helps determine an employee’s eligibility for government payments and benefits.
Accuracy in STP2 is crucial to:
- Ensure your employees are paid correctly
- Lower income-related debt of your employees
- Minimise reporting errors
- Have a more equitable debt capacity analysis
Visit the ATO website for more information on the STP2
Minimise payroll errors
According to the Australian Payroll Association, one in three organisations commit mistakes in every single monthly pay run. About 45% admit that errors are picked up by the employees and not by payroll managers.
Miscalculation on super, bonuses, leaves, deductions, and allowances does not only leave employees frustrated. It can lead to penalties from the ATO and disputes on employee entitlements.
While larger companies are more prone to payroll mistakes, small businesses have their own challenges to pay wages and salaries on time. For example, ATO requires several actions when correcting reporting errors on your employee’s super. Depending on the situation of the error, this can be time-consuming if you are doing this alone.
Consider outsourcing your payroll if minimising payroll errors seems difficult to manage. A payroll specialist focuses solely on making sure there is no miscalculation and that your employees receive the right compensation for their hard work.
Running your payroll process includes hiring & training staff and investing in software. It can be costly especially when you have limited financial resources.
Outsourcing payroll gives you the advantage of reducing these costs. The service provider invests in up-to-date systems to ensure a smooth payroll process for their clients.
Enhanced data security
Network safety and identity theft are some risks associated with in-house payroll management. Moreover, there is a potential data mishandling as the number of employees increases.
These things are difficult to manage when you wear many hats in your business. Outsourcing payroll reduces the risk of data mismanagement because there is a third-party managing it.
Focus on core business
Distractions surround business owners who have limited time to balance tasks. For example, disputes about employee entitlements – such as annual leave, long service leave, and sick leave – can take much of your time from doing core functions.
Through outsourcing, there is a guarantee that an expert is looking after your payroll and making sure nothing is missed. You can spend more time setting your priorities and monitoring your business growth.
Let us help you with your payroll processing!
Focus Bookkeeping provides quality bookkeeping and BAS services for many businesses. We offer solid business advice to ensure you understand your business’s financial and obligatory perspective.
Fabiana Silva is a fully qualified bookkeeper and a registered BAS agent with over 20 years of experience in bookkeeping and business administration.