If you are a new employer and setting up your payment schedule for new hires, it can be difficult to wade through all of the existing administrative and bureaucratic procedures. Knowing how to sort out wages, benefits, taxes, and payday filing can be a lot of work. While you may not have to master everything to get your business off of the ground, it can be helpful to be informed about employee payments to ensure you meet all of your obligations.
Establishing a framework for handling employee payments can save your company valuable time and money when it comes time to filing taxes. Ensuring that your payroll runs smoothly can also keep your employees happy and instil confidence in the stability of your company.
Let’s take a closer look at how you can better handle employee payments for your business.
Establish a Wage and Salary Structure
In New Zealand, all employees must receive written contracts that specify the precise terms of their employment. These contracts will contain detailed explanations of your company’s payroll structure. Whether you choose to pay wages or salaries, or whether you are setting efficiency wages or extra incentives for overtime, payroll information should be well-prepared before any hiring is conducted.
Some details to consider when constructing these contracts are the duties and responsibilities of the employee, your company’s wage rate, and other details about additional entitlements. Regarding entitlements, make sure to have provisions for sick and other types of leave, superannuation, and vacation pay.
It is important to know that the minimum wage in New Zealand is currently $14.16 for employees in training and workers who are just starting out. It is $17.70 for employees who are adults. If you are paying your employees on the basis of salaries, the minimum salary must be no less than the minimum wage rate.
What to Consider When Determining Pay?
What is deemed a fair and reasonable salary depends on a variety of factors and inputs. Some things to consider when choosing a wage that will attract quality employees are considering the credentials required to do the job in question, existing pay rates in similar positions, and what your company can afford to pay. The end result should be the right balance of these elements.
Make Sure to Comply With Payday Filing Legislation
New legislation was passed in 2018 which has made payday filing mandatory for all businesses (with employees) in New Zealand as of April 1st of this year. While this means that all existing businesses should already be informed and have implemented the new payroll filing standards, new employers may be in the dark about this change.
Under this new system, employers must submit all employee earnings to Inland Revenue. This must be done for every pay period. Formerly, it was only necessary on a monthly basis, regardless of the pay-period structure of your business. Depending on your internal accounting practices, this change may mean a little extra work and organisation within your company.
Some employers will be able to file payroll information in paper form. However, if the PAYE deductions of your business exceed fifty thousand dollars, you must submit the necessary forms electronically.
For more information about the specifics of payroll filing, see the Inland Revenue website.
Keep Payroll Organized and Running Smoothly
Your payroll system is one of the most essential components of your business. Keeping your payroll system running smoothly will drastically reduce the likelihood of employee dissatisfaction and will keep you in good stead with Inland Revenue. If you are a new employer, be sure that you take the correct steps when setting up your business to avoid any problems in the future. With the right approach, you will be on a course for success and you can be sure of your employees being paid correctly and on time.
