Optimise your Holiday Payroll
Managing payroll is an important part of running your business – especially during the holidays. Your employees may get bonuses or be paid overtime, or you may need to take on extra staff to keep up with demand. Find out how to manage your payroll properly and avoid unexpected surprises.
6 ways to optimise your payroll for the holidays
1. Account for the right employee deductions
Some aspects of payroll management can be complicated, including managing payroll deductions. Most business owners understand that deductions are necessary, but calculating them can involve many variables, or you could be breaking the law.
Keep your employees informed - by showing employees’ deduction information on their payslips (printed or electronic) can reduce questions and keep your employees happy. It also means you can show your employees how much you as the employer contribute for them. Without showing this information, your employees may not know the value of these extra benefits.
2. Account for overtime
Overtime is extra pay for hours worked by your employees over the amount they would normally work. Employee overtime can be a big additional cost in your operating expenses over the holidays. So make sure you check that your overtime payments will be covered by a corresponding increase in sales. Employee overtime can quickly add up, so get an accountant or bookkeeper to take a look at your overtime costs. Some questions to ask are:
- How much overtime does your business currently incur, and do your sales cover the additional cost?
- What is the total cost of the overtime?
- Where does the overtime come from and why does it happen?
- When does the overtime occur?
- Is there a trend, or is it seasonal?
Having the right data is critical to managing your costs. It’s worth spending the time and effort to collect and analyse it.
3. Account for the holidays with well-designed payroll software
Make it easy to process leave requests. Employees should be able to apply via email or an app, and managers should be able to approve with a mouse-click. There doesn’t have to be a whole ton of paperwork. Even if you’re already using payroll software, you may not be getting the most value from it. Ask yourself the following questions:
- Can you quickly and easily produce reports showing what holiday pay has been paid and when? You may be asked to provide this information by government agencies, unions, or other relevant compliance bodies.
- Do your employee payslips or notifications clearly show when holiday time has been paid
- If you provide holiday pay for some employees but not others, can your system identify and group them?
4. Track all time off for new and existing employees
Smart payroll software makes it simple for your staff to submit their holiday or leave applications and receive notifications. The best software will be able to automatically accrue (add up), deduct and manage all sorts of leave including holiday, annual, sick, bereavement, parental or maternity leave.
5. Track holiday bonuses
Bonuses are often given out around the holidays. If you plan to give your employees bonuses, you need to consider the tax implications – for both full-time and part-time employees. The ATO specifies the rate at which bonuses must be taxed. Make sure you comply with Australian employment law. Contact us if you need more clarification about holiday bonus payments and deductions.
6. Manage salaries and taxes
It’s critical you to stay up-to-date with the rules and regulations that affect how to pay your employees. The potential cost to you if you fail to meet deadlines or miss filing certain forms can be high, especially if you’re a smaller business. Payroll tax filing is a business necessity, but it shouldn’t be costly or difficult. By being informed and up-to-date, your business will avoid costly mistakes and delays.
If your business has employees, one of the most important tasks is to make sure they are paid accurately and on time. Optimising your payroll makes it easier to monitor the progress of your business, prepare your financial statements, keep track of deductible expenses, and prepare your tax returns. It will also reduce your stress if you ever get audited. So it pays to be prepared as far in advance as possible.
This article was extracted from www.xero.com
