Common challenges we see our clients experiencing in payroll
There’s no surprises here – payroll forms a crucial function for all Australian businesses. It ensures legal compliance by accurately paying employees in line with employment laws. It contributes to employee satisfaction and retention by ensuring timely and accurate wage payments. And it plays a critical role in tax calculations, deductions and superannuation contributions. Here are some of the challenges we see that can start small, but often snowball into larger ones.
Superannuation guarantee incorrect
Lack of correct systems and processes can result in easy mistakes, and missing the super guarantee is one of them. However, even with good systems in place, inadequate understanding or misinterpretation of superannuation guarantee rules can still occur and harsh penalties apply for inadvertent errors. The complex rules regarding what constitutes “ordinary time earnings” is a good example of where the rules can be misinterpreted.
Reversal and correction of pay run and superannuation done incorrectly
Like many errors, it is often a lack of attention to detail when reversing and correcting pay runs and superannuation that creates confusion and inaccuracies in payroll records. This leads to reconciliation issues, incorrect tax reporting, and potentially affects employee entitlements.
Annual leave accruals not calculated correctly
This one often comes down to simple errors in manual calculations or data entry for annual leave accruals, causing issues with leave balances and worst case scenario – potential employee disputes.
Bookkeeper may not have adequate HR experience
Payroll involves more than just accounting; it requires knowledge of employment laws and regulations. Without relevant HR expertise, your bookkeeper may struggle to accurately calculate wages, deductions, and entitlements, leading to potential errors and compliance issues.
PAYG withholding on back payments not calculated correctly
A misunderstanding of how PAYG withholding applies to back payments can result in underpayment or overpayment of taxes, leading to potential compliance, financial and tax-related issues for both employees and the business.
Not understanding payroll tax reporting
Payroll tax reporting can be complex, and a lack of understanding or knowledge gaps in payroll tax can lead to non-compliance and potential penalties. Incorrect reporting can result in underpayment or overpayment of payroll tax, causing financial implications for the business. It is crucial to have a good understanding of payroll tax reporting obligations to ensure accurate and timely compliance