So you have hired an employee – so what??
So your business is going great and you need help – so you hire an employee. And even better you pay them for their time. This employer/employee thing is really easy right ?
However there are several things you need to do before the process can be considered “simple”. For example, have you registered your business ABN for PAYG Withholding? Most times I ask small business owners this question the general response is “PAYG What?”.
Basically a business simply can’t pay people as employees at any old time they choose without complying with certain statutory obligations – these obligations are usually imposed by the Australian Taxation Office.
It doesn’t matter if the employee is full time, part time or casual – nor does it matter how much this person is earning – as soon as you hire an employee you must be registered for PAYG Withholding, you must submit a Tax File Number Declaration for that employee, you must provide them with a Super Choice form, you must give them a copy of the National Employment Standards, you must calculate and pay Super contributions (if applicable), you must calculate and withhold tax (if applicable),you must issue them with a Payment Summary at the end of the financial year and you as a business owner must submit a Payment Summary Annual Report to the ATO each year (which reconciles back to the individual payment summaries issued to employees) – just to name a few obligations as an employer.
Does the employee process still sound easy?
You might feel that these obligations for business owners are difficult, time consuming, onerous and a waste of time. Well I think the exact opposite. The purpose and intent of these rules and regulations is so that the ATO can keep track of business owners and ensure they are paying the tax on behalf of its employees. It is to ensure that business owners are not claiming deductions for wages that in fact were never paid, or claiming deductions for superannuation when in fact no wages were paid. And trust me, there are business owners out there that are scruplous and look for loopholes just to avoid their obligations. Don’t become one of those statistics. It is also a way of tracking individual income, to ensure that individuals are not claiming their employer has withheld more tax than actuals – and giving falsified refunds.
Basically the rules and regulations are there to protect everyone in the employment relationship.
So, have you paid anyone this past year, or are you going to be paying anyone in the current year? If so, I urge you to assess if you are complying correctly.
Healthy Business Finances can register your business for PAYG Withholding via the BAS Agent Portal as Stacey is a registered BAS Agent.
Need copies of the TFN declarations, Super Choice Form or National Employment Standards to give to your employees? Well we can help with that as well.
Do your homework as ignorance is not an excuse the ATO look favourably on.