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How important is it to properly process payroll?

financial figures on a graphs
business colleagues working together and analyzing financial figures on a graphs

Whether you process it weekly, fortnightly or monthly – payroll is an essential part of every business. If you decide to take on the task of processing your payroll yourself then beware! There can be serious consequences from incorrectly recording your payroll. Australia is rated as having the fifth most complex payroll system in the world, so it’s a task you want to get right the first time.

The fastest way to put someone on their back foot- is through their pocket.

Your employees are the backbone of your business, and just like you, they’ve got financial commitments. Underpaying, forgetting to pay, and late payments of payroll are a sure way to create low staff morale and distrust in your business. Employees do not like chasing up what is owed to them and it creates a void in the working relationship that can create a negative working environment. This can lead to poor staff retention and also a not so great reputation as an employer as we all know- people talk. In short – if you don’t pay your employees correctly they will not remain yours for long!

Little things can add up to be very big things

A simple mistake or omission in a weekly pay run will eventually snowball into a larger issue. Usually in the form of getting slapped with a large fine from the government. Make sure you are across all of the employment legislation that covers your industry, and that you have agreements in place to ensure transparency between both employer and employee expectations. With the gradual implementation of STP (single-touch payroll), employers will be much more visible and exposed “in real time” to the ATO, so take the time now to make sure you’ve got your systems right!

Fixing your mistakes will double your work.

Rectifying an incorrect payroll can be expensive and time consuming. Whether you outsource that work or attempt it yourself, it is both a costly and uneconomical exercise and is something to try and avoid, so make sure you double check everything the first time around!

It just plain makes you look good.

When payroll is processed correctly consistently, it reflects well on your business. You will have happy employees, great staff retention, and positive morale to go with that. You will also reflect a sense of organisation and your employees will have trust that you are across your financials which instils a sense of security within your team of people. It also means your accounts will be accurate and precise, which will help you out that extra bit when it comes to all your financial reporting and forecasting.

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