Should I Process My Company Payroll?

Everyone has seen the recent high-profile cases where employers that have not paid their staff correctly are being accused of “wage theft” and being vilified. While there are undoubtedly employers who play the system and increase profits at the expense of their staff, the complex awards system in Australia means that is easy to fall foul of the system and under (or over) pay your staff for a number of reasons. If you are caught out underpaying staff as a small business, the risk to your reputation could easily see you losing the business that you have worked so hard to create and build.

Currently in Australia there are 122 awards relating to occupation types. Within your organization you may have staff who come under a number of different awards depending on the nature of their role. The primary reason staff come to work is to earn a fair wage for doing a fair job, so should you be found to be underpaying them, even inadvertently, you could not only be at risk of prosecution, fines and penalties, you could see your reputation as a business owner irreparably damaged, especially if your customers were to find out.

In addition, there can be a grey area between whether a worker is a contractor or an employee and the onus is on the organization to ensure that the worker is managed correctly for both tax purposes and to ensure that the organization isn’t simply trying to avoid legal entitlements to the person. When employing contractors, it is imperative that the employer obtains the correct documents to support the workers position as a contractor and not have them deemed as an employee if an audit is conducted by the ATO.

For the majority of small business owners, payroll will not be a core skill that they possess and they are simply doing it themselves to save the cost of employing someone to undertake the work, whether that be in house or as an external consultant. This may seem like a good cost saving measure in the short term, but should mistakes be made and the employer be found to be non-compliant, the cost can easily become a large multiple of the money saved. It also frees up time for the business owner/manager to focus on delivering their core service and product and grow the bottom line of the business.

Current technology means that a payroll contractor has no need to take up space in your office and can access everything they need to process the company payroll via the cloud. Most, if not all, payroll software will have a cloud version, which can be accessed anywhere there is an internet connection and in terms of document management, there are a number of products which allow for electronic storage in the cloud such as OneDrive and Dropbox. As long as the payroll process is robust and the products used have strong data security then there is no reason why the small business owner can’t outsource this service and focus and the part of the business they enjoy and makes them more profitable.