First Wages

Setting Yourself Up To Pay Your First Wages

According to professional accounting firms when it comes to bookkeeping and accounting, it is extremely important to keep a clear record of any and all wages you have paid each financial year. If you are planning on employing people directly, you will need to set yourself for PAYG tax withholding. However, if you are planning on using self-employed contractors, then the process becomes a little easier.

What things do I need to set up before I can pay wages?

When it comes to setting yourself up to start paying wages, there are a number of things that you need to do. Failing to do any of these can lead to problems with the Australian Taxation Office (ATO) at the end of the financial year. Make sure that you do the following:

  • Register for PAYG withholding – If you employ anyone directly, you will need to register for PAYG tax withholding. Basically, whenever you pay someone a wage, you need to withhold a portion of this wage to cover their tax requirements. This money is then sent on to the ATO, and in an ideal world, will cover your employee’s tax bills.
  • Get new employees to fill out a TFN form – Whenever you set up to start paying a new employee, they will need to fill out a tax file number form.
  • Get super details – Australian law says that you have to pay superannuation to anyone who is earning more than a certain amount. The amount of super you have to pay will depend on the employee’s wage, but make sure that you ask them for details of the account where you want them to pay it.
  • Work out how much you are paying – Ok, you should really figure this out before you employ anyone, but it is extremely important to make sure that you are paying all of your employees a fair wage which is compliant with Australian law.

What is the minimum wage in Australia?

The minimum wage for an adult working 38 hours full time per week is just under $700 per week. However, casual wages are at least 25% higher than this, and certain qualified or experienced people will demand a higher minimum wage.

What things should I think about when determining how much I need to pay someone?

When it comes to deciding how much an employee is worth, you need to consider a number of things. Think about:

  • Their experience and the kind of work you are going to have them doing. Skilled jobs or jobs that require a lot of training usually command higher wages.
  • The minimum and award wages for your industry. Make sure that you take this into account to ensure that you are both paying a fair wage and complying with Australian government laws.

Although it may seem daunting at first, it really isn’t that hard to start paying a new employee. If you are unsure about what is required of you, then either speak to the ATO or sit down and talk over it with your accountant.