At the end of each year, every business undergoes a procedure with regards to payroll. There’s nothing to fear about the process and things will run smoothly if you go through these steps.
Step 1 – Process final pay runs.
Ensure all pay runs are complete for the financial year.
Step 2 – Reconcile end of year payroll to your accounting ledger.
For this step review all the earnings, superannuation and tax amounts recorded in your payroll software and match them to the amounts in the general ledger.
Step 3 – Review & check employee Payment Summary amounts.
This is where you check the placement of amounts on the payment summary. You should review each employee’s payment summary and pay particular attention to:
• Reportable employers superannuation contributions
• Reportable fringe benefits; and
• Union fees (if they are deducted from earnings)
You should also check that the authorised person, employer details (e.g. ABN) and the payment period are correct
This is the information that employees will use in preparing their tax return to proper care must be taken in completing this step to ensure information is accurate.
Step 4 – Distribute Payment Summaries to employees.
After ensuring all payment summaries are completed correctly, you can then distribute them to employees by mail, email or whichever way preferred. It is important to have security on the file when sending payment summaries via email to ensure privacy of TFN. This can be done by having passwords needed in order to open the file. Employers are required to distribute payment summaries by the 14th of July each year.
Step 5 – Send annual payment summary report to the ATO.
An annual payroll report must be sent to the ATO. This can be done through the ATO business portal or with the tax agent through BAS. This report is due on the 14th of August each year.
Author: Heather Cox