Monthly Archives: July 2020

Hire Staff – hiring the right people

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A business is only as good as the people it employs.  Do they work hard, do they work smart, are they loyal or do they just want that paycheck and be out of there. This guide will look at if you have a need to hire staff, defining the role they will do and the task that must be completed.  Will they be full time, part-time, casual, or a contractor?

The common types of employment are:
full-time: an employee who works 35+ hours per week on an ongoing basis
part-time: an employee who works less than 35 hours per week and has a guaranteed minimum number of working hours
casual: an employee whose work hours may vary each week, depending on the work available
fixed term: an employee who works for a fixed period of time e.g. 3 months
shift workers: an employee who works shifts and gets an extra payment for working shift hours
An employee works in your business and is part of your business. A contractor is running their own business.
contractor can be great for short term projects and can also be paid by the hour without superannuation requirements.

WHY hire staff?

You may not have the skills or the time to do some tasks, or perhaps your time is better spent working on other parts of the business. If so and its time to hire staff assuming their efforts will drive more profit than their salary.

WHAT do I need to understand before you hiring staff?

Ask yourself, what level of skill will this person have and how much will you need to pay to attract the right candidate?  You do need to comply with government legislation in regard to award pay levels which can be found here https://calculate.fairwork.gov.au/findyouraward and discrimination laws here https://www.humanrights.gov.au/our-work/employers/quick-guide-australian-discrimination-laws

HOW to hire staff?

Finding candidates

To find the right candidate, you can either do this yourself or use a recruitment agency.  A recruitment agency will charge you either a set fee or a percentage of the employee’s salary.  If you can afford this it offers a great way to only interview a small number of vetted candidates. If you decide to do this yourself make sure you don’t hire the first person you interview.  Even if they turn out to be the right person you need a point of comparison.  You can find people by word of mouth, an advertisement in your window, the local paper, social media post, or a post on your website or newsletter. A job board like LinkedIn or Seek is handy and with a small fee, it will significantly increase your pool of candidates.

Candidate selection starts before the interview stage where you decide who you will interview.  Many businesses may have 100 applicants for 1 position.  Start by setting the criteria that are most important from a skill perspective to perform the job, for example, must have managed people before.  If the candidate has not they are out of contention.  Seek has a function where you can ask candidates set questions during the submission process. Once this is determined start reducing your list of candidates down to around no more than six people.  Your time is valuable and you cannot interview everyone.  A very important criterion is to ensure the candidates have the right to work in Australia.  There are ways around this but require a significant investment of time and regulation. https://www.business.gov.au/People/Hiring/How-to-hire-an-overseas-worker  Even those with working or student visas have restrictions,  students only being able to work 40 hours in a fortnight and holiday visa workers are not able to work for someone for more than 6 months.

Interview

Now it is time to interview.  Consider where you will interview them, for how long, by whom, and specify if you want them to bring anything. Remember they are interviewing you as well as you interviewing them.  A candidate wants to understand your business, and you as the boss, to decide if they indeed want to work for you.  So some points to consider include what you wear, how you treat them and what questions you ask. You do not want to be a tyrant and you are not their friend so remember to treat them with respect.  A successful practice is to ask each candidate the same questions and to rate them against each other.  That way you have a clear comparison and a method of comparing the person you interviewed today with the one two weeks ago who you can hardly remember. You should take into consideration how each person fits with the skills set you defined earlier, how they will fit into your organisation culture, if they can show you their previous achievements and if they are passionate  (remember a small business is only as good as its people).

In some industries it is common practice to test potential employees through a trial.  We recommend that you pay them and give them a proper opportunity to show their worth.

You have now found the right person but before you hire them on the spot it is a wise idea to check references.  Unfortunately, some people do lie, and the more you are sure about someone the better things will work out.  Okay, all that checks out and the person has great references.  Now it’s time to make them an offer.  The offer needs to be clear around working hours, salary, place of work, anticipated start date, and may include additional items like employee confidentiality or IT policies. A template for an employment offer can be found here. https://www.fairwork.gov.au/how-we-will-help/templates-and-guides/templates

On-boarding

Once they accept, congratulate them and provide them with any further information to ensure they know the next steps, like what time you need them and what the dress code is, etc.  Now comes the hard bit.  Unsuccessful candidates interviewed with you and chances are they put a bunch of effort into that process.  You need to contact them and let them know they were unsuccessful.  Ideally be specific with the reason, for example, they lacked a specific skill, so they can improve next time rather than some generic statement like the other candidate was better.

The big day has now arrived for your new employee. Before they turn up you need to plan to induct them into your business and decide what they need to be taught and by whom.  Chances are it is you and it will take a lot of effort to begin with, but if done well you will have a happy and hardworking employee in no time.

You are now responsible for a new employee both personally and from a legislative perspective. If you don’t already have systems in place you must consider reporting like timesheets, payroll and taxation, superannuation, annual and sick leave, insurance, and workplace health and safety. (Be sure to check out our essential guides on these topics)

HINT

Candidates may attempt to negotiate employment terms such as wages. Always listen but remember it does not mean you have to compromise. 

Additional information can be found here

SUMMARY – Hire the right people

Your people are your business. Having the right employees is critical to your success. To Hire staff can be a rewarding process and will become simpler the more experience you gain.

Freight solution to customers

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Sending a parcel to someone seems like such a simple thing.  You pop an item in a bag and you take it to the post office and you have a happy customer when it arrives. If you are looking for the right freight solution then this guide will explain what you need to know and what options are available for you to facilitate the shipping of your goods.

Logistics (or Shipping) is the commercial activity of transporting goods to customers. It is also the detailed organisation and implementation of a complex operation.

WHY do I need to deliver my goods?

If you have goods to supply you can have a customer pick-up or have it delivered.  You want to increase your customer base to your immediate area, offer greater convenience or simply you do not want to offer a retail sale in a store you will need to offer delivery options.  If you want to deliver you will need to select a freight solution.

WHAT do I need to know about shipping?

Let us make the assumption that you are not after a courier and that over a year you will have the need to deliver many parcels. 

Your choices are:
  1. Deliver them yourself or by an employee
    1. If local could be a cheaper option but ties up your or your employees time.
  2. Use Australia Post
    1. Economical but you might have to take parcels to a post office
  3. Use a specialised freight company
    1. Will pick up from your location
    1. Some even offer cheaper rates than Australia Post, with door-to-door delivery in a shorter time. Note however their service may not cover remote areas.

You need to package your goods. No good if they arrive broken.  Thus, special care should be taken to ensure items are packed carefully and you select the appropriate size packaging for protection and economical shipping.  A big box for a small item means you will pay to move air.

Specialised packaging might need to be considered to simplify shipping or protect the goods, like a padded bag which is fast to pack or a shipping tube for artwork. 

Time is money and in this case the faster you want something to arrive the higher the cost will be.  Thus the same day, airfreight, overnight, and even delivery at a specific time will cost you more.  Some perishable items might require fast delivery.

Dangerous and prohibited goods may be banned or require special attention when shipping. This includes if an aircraft will be used.  You should check with your freight company. The Australia Post list can be seen here. https://auspost.com.au/content/dam/auspost_corp/media/documents/dangerous-and-prohibited-goods-guide.pdf

HOW should I choose a freight solution company?

Cost– If you are starting off it is hard to estimate what your volumes will be but most freight companies including Australia Post will give you a contracted rate based on expected volumes. There will be sliding scales depending on distance so make sure you compare like for like.  Also understand the delivery class of each, one might be overnight the other 4-5 days.

Tracking – Everyone offers to track these days but not all in the same way.  Understand what tracking is available and how quickly it is updated and at what points in the process  i.e notification only when picked up and delivered vs  multiple notifications on route such as picked up, at a warehouse, in a van, and delivered.

Estimated delivery time – Not all companies use their own trucks and might rely on others.  What you care about is how long they estimate delivery.  Fast delivery equals happy customers especially if they have not paid a premium for that service.

Pick-up– Will your freight company come to you or are you required to drop everything at a depot or post office.  This is likely to have an effect on the price.

Signature on delivery – Valuable items such as currency, jewels, or important documents may require a proof of delivery in the form of a name, signature, or photo.

Insurance – Most freight companies provide a minimal amount of insurance and if items are lost in certain conditions you can make a claim.  For example, Australia Post may compensate you up to $100 for lost or damaged items. You should take note of what is covered for how much and in what circumstances.  You may also wish to understand the costs of additional insurance if needed.

Integration – If you can integrate your e-commerce store or POS solution with your freight company you can eliminate a bunch of administrative work around labeling and booking saving you time.

Phone support – What hours and support can the freight company provide to you.  If you have a lost package at  6pm on a friday can you get help finding it?

HINT

Don’t underestimate the time it takes to pack an item ready for shipping, organise the transport, and attach the labels.  It all adds up.

Freight companies charge by both volume (dimensions added up) and weight.  If you have a light bulky item you will pay based on the volume.  If you have a tiny heavy item you will be charged by the weight.

These two websites do a comparison of freight charges as a one-off and may be useful to help you decide which freight companies to contact to ask for contracted rates.
https://www.comparecouriers.com.au/
https://www.parcel2courier.com/

SUMMARY – a Freight solution is a cost and a customer service

Offering delivery of your goods can increase your customer sales.  These customers must be kept happy and have a good experience in a timely manner.  Importantly, keeping your freight solution costs lower will increase your profit.  Pick the right freight company for your needs today then review your decision at least every 2 years.

Finding a business premises

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You are ready to make that big move and open a restaurant, or maybe the home garage is not big enough anymore, maybe you want to be considered seriously and need a professional workspace.  How do you go about finding that property? This guide will help you on that journey of finding business premises.

WHAT do we need to decide first to find new business premises?

Your journey starts by deciding on the criteria by which you will make your decision.  The better your list the better result you will get. 

You need to consider:
  1. Will you buy or lease/rent a property?
  2. Would you be prepared to share it with others?  There are options around co-location or shared offices where you can run your business from a location shared by other businesses and thus share some of the facilities like a conference room or even a receptionist.
  3. What are your needs and wants in a property? – If you are opening a restaurant you probably need to be in a popular location.  If you are opening a retail store does that need to be in a mall. Will customers find you in an industrial estate? How much room will you need? If you are establishing an office you would need around 10 square meters per person. Do you need a kitchen or 3-phase power? How much parking will you need? Can trucks access your location easily? Do you need to be close to your customers? Is there a need for public transport so your workers can get to work? Do you need to consider your future needs?
  4. Will council zoning impact your choice?  For example, some business types cannot operate in a residential area.
  5. What is your budget? Can you afford it? Also consider other outgoings like office set up, moving costs, annual rental increases.

HOW do I find the right business property?

Now the search begins in earnest! There are several ways you can find properties:

  • Find the location yourself by searching for your desired area.  A For Lease sign is a dead giveaway
  • Speak to a local real estate agents
  • Contact a commercial real estate agent
  • Find a Property Broker, they will search on your behalf
  • Use the commercial sections of property websites realestate.com.au or domain.com.au

Using your search criteria and now having a list of possible locations, it is time to visit those properties. Be patient, do your homework and be careful not to make hasty decisions.

Once you have made up your mind it’s time to negotiate the price.  Chances are you can get it for cheaper so start talking turkey. 

HINT

A good idea is to ask existing neighbors questions about the location/ intended premises.

Be sure to read our essential guide on renting an office

SUMMARY – Finding the right business premises!

Decide if you will buy or lease then come up with a  want/need criteria list. Be patient and don’t forget to negotiate on price.

Expense management

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If you have employees, chances are they will spend money that they will claim back from the business.  Is the $200 bottle of wine an acceptable expense?  Is there an easy and quick way to process those expenses? This guide will look at how you can use expense management software to improve employee productivity and ensure your records are more accurate.

Expense management refers to the systems deployed by a business to process, pay, and audit employee-initiated expenses. This most likely will include policies and procedures that govern such spending, as well as the technologies and services utilised to process and analyse the data associated with it. Expense management software helps simplify this.

WHY consider Expense Management Software (EMS)?

Imagine you leave a restaurant, open an app on your smartphone, take a photo of the receipt, select the applicable expense item, and submit for approval and payment. You are done in less than a minute.  Why? – Because EMS cuts down manual processes, it is easy and fast for both the employee and employer.
Predominately being cloud-based solutions make the software affordable.

What is the difference between manual vs automated expense control?

Advantages of automated expense control:
  1. Productivity. Time and money lost due to misplaced receipts, forgotten expense approvals, and error-prone manual data entry, can put a significant drain on employee productivity and morale. Expense management software can curb these issues and increase efficiency.
  2. Captures GST.  The GST on each receipt can be accurately captured for allowable credits (talk to your accountant to understand what is allowable, for example, entertainment is not)
  3. Automatic integration.  Allows expense data to be loaded straight into your accounting package without any manual processing.
  4. Analyse spending. The ability to track spending by expense category, unit or vendor provides insight into spending trends and identifies areas for cost savings. Organisations can improve their cash flow cycle and forecast for future expenditures.
  5. Compliance. Internal policies, as well as external government and tax regulations, can cause non-compliance risks for a business. Expense management systems help reduce risks by evaluating expense reports against internal and external regulations.

How do I select an expense management system that is right for me?

Features you should evaluate include:
  • Accounting integration – Many systems integrate with popular accounting packages such as Xero and MYOB allowing for easy export of reports and eliminating the need for manual data entry. Be sure to read our essential guide on Accounting Software.
  • Expense compliance – Having some spending policies is a good idea, like a meal allowance whilst traveling. Will the software enforce spending policies and assist with fraud detection flagging expense overruns, duplicate expenses, missing documentation, and so forth?
  • Car mileage – Ability for an employee to track kilometres traveled for a work trip using their car.
  • Approval – Does it streamline the review and approval process by enabling you to approve based on expense type and other variables?
  • Analytics reporting – Will reports help forecast and budget for future expenses, identify spending trends, and highlight cost savings opportunities?
  • Automatic expense import – Do you want it to connect to email accounts and credit cards, allowing users to pick and choose charges to add to expense reports?
  • Smartphone receipt capture – Enables users to scan, email, or take a picture of receipts for easy submission.
  • Direct deposit – Do you want it to link directly to employee bank accounts for quick and easy expense payments.

Summary – photo receipts and accounting software integration

There can be some very fancy features offered from the expense software vendors but in the case of the small business, we recommend you go with the software that offers the basic features like uploading photos of receipts and accounting package integration to minimise costs.  You may also find your accounting package either has this feature built-in or an add on module can be purchased.

Bank account for small business

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You have started your new business, you open your wallet and pull out some cash, and you wonder is that my money or some petty cash from my business?  Even if you have chosen to be a sole trader it’s a great idea to open a bank account, if you are any other business structure you must have a business bank account for tax purposes.  Once you do it opens up the ability to articulate which money belongs to you and which to the business. This guide will help you understand the benefits of having a business bank account and help you understand what you should consider in selecting an institution.

A bank is a financial institution that accepts deposits and recurring accounts from the people and creates demand deposit. Lending activities can be performed either directly or indirectly through capital markets.
Wikipedia

WHY have a separate Business Bank account?

When running a business you must keep account of business transactions and a bank account is a great way to have an auditable paper trail.

A separate business bank account will help you to:
  • Clearly show your business finances separate from your personal finances
  • Analyse your cash flow
  • Monitor your business income and expenses
  • Extract information needed to meet your tax and reporting requirements
  • Get detailed records of your business transactions. These can be downloaded to a spreadsheet or imported to an accounting package.

WHAT else can you do with a Business Bank account?

If you have a credit card attached to your business bank account and do most of your transactions through your credit card, your bank statements will, in effect, be a checklist of those expenses.

Some banks offer overdraft facilities, essentially providing a loan facility to go into a minus balance.

To open an account you will need an ABN and ID documents of an authorised owner or director of the business.

HOW to choose a business bank account?

So which bank should you choose? In fact you may not choose a bank, it may be a building society or credit union.  The answer is the one that suits you best and you should consider these points when making your decision:

  • What are the fees and charges?
  • Do they offer merchant facilities like EFTPOS?
  • Are their interest rates competitive if you need to borrow?
  • Do they cater to the needs of small businesses and do they have offers/solutions to suit?
  • Is there a local branch in case you need to visit? 
  • What is their online banking interface like and will it integrate with your accounting package?
  • What information is reported on each transaction?
  • What security measures do they offer for online transactions to protect your business?
  • How fast do they transact instructions and until what time at night?
  • Do they offer foreign transfer arrangements and what are the charges?
  • Can you have access to your own bank manager or business banking specialist?

For more information and comparing various bank accounts visit
https://www.finder.com.au/business-banking

For taxation purposes, the ATO provides the following guide on record-keeping https://www.ato.gov.au/Business/Record-keeping-for-business/Detailed-business-record-keeping-requirements/Running-your-business—records/Banking-records/

Here you will find useful information such as the requirement to keep records for 5 years including the period of review.  For example, did you know that if you did your 2015 tax return in 2016 you would need to keep your 2015 tax records until 2021.

HINTS

Regularly bank all the cash your business receives so your income and expense information is always up-to-date and you can easily reconcile your accounts and analyse your cash flow

Register for online banking – this may simplify your record keeping and bank reconciliation process as you can:
  • easily get detailed records of your business transactions
  • download financial information from your online account to your accounting package
  • identify extra transactions in your account including bank fees or interest charges, and direct debits and credits
  • check and record any errors or omissions
Regularly reconcile your bank records, which may help:
  • you be more confident that your records contain all the information you need to prepare your tax return and activity statements
  • you to better understand your cash flow
  • reduce the time it takes to prepare your activity statements or tax returns

SUMMARY – Small Business Banking

Unless you are a sole trader you must open a business bank account.  It will help you manage your finances and different providers will have an offer to suit your needs.  Always check to see what other services the bank may be able to offer your business.

A handy comparison of bank rates and fees is available here to help you compare. https://www.finder.com.au/business-banking

Business Insurance – protect your business

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In many of the guides available from this website we have been discussing liability associated with running a business.  We have used extreme examples, like losing your house, so you understand worst-case scenarios.  The good news is that we can protect ourselves against most of these liabilities and this guide will explain the key insurance types you should consider.

Insurance is a means of protection from financial loss. It is a form of risk management, primarily used to hedge against the risk of a contingent or uncertain loss.
An entity which provides insurance is known as an insurer, insurance company, insurance carrier or underwriter. A person or entity who buys insurance is known as an insured or as a policyholder. The insurance transaction involves the insured assuming a guaranteed and known relatively small loss in the form of payment to the insurer in exchange for the insurer’s promise to compensate the insured in the event of a covered loss. The loss may or may not be financial, but it must be reducible to financial terms, and usually involves something in which the insured has an insurable interest established by ownership, possession, or pre-existing relationship.
(source Wikipedia)

(source Wikipedia)

WHY do I need Business Insurance?

First consider your personal life.  Do you insure your car, home, health, income, or life?  Yes, most of you do protect yourself from unexpected expenses in the unlikely event something goes wrong.  A business is no different!

WHAT might we need insurance cover for?

In business the sorts of things we would consider protecting include your workers, your personal liability, company assets like buildings, company revenue, and your customer.

HOW do I know which insurance policies I will need?

Some insurance is compulsory and includes Public liability, Third-party Personal Injury (if you own a car), and Worker’s Compensation (if you have workers).

Public Liability Insurance

Public liability insurance covers you for third party injury or death. It helps protect you and your business when you are liable for negligence. This can be as simple of someone falling over in your shop but other examples include:

  • food poisoning
  • property damage, such as causing a fire
  • providing bad advice, e.g. selling a commercial fridge to a restaurant that fails to keep its temperature meaning the restaurant incurs a loss of inventory
  • nervous shock, such as emotional distress or a recognised psychiatric illness
Third-party Personal Injury insurance

You cannot register a vehicle in Australia without this insurance however please make sure you declare you will be using the vehicle for business purposes.

Workers Compensation Insurance

If someone is injured or illness occurs in a workplace you have responsibilities to cover the costs which will be incurred, you cannot just send them off to a bulk billing doctor and pretend it happened at home.  This insurance will cover worker’s compensation, first aid, and rehabilitation.  There are authorised providers of this type of insurance and a list is available from APRA https://www.apra.gov.au/register-of-general-insurance

Some quick callouts.  Sole Traders cannot cover themselves individually.  Independent contractors may require their own insurance. 

Other insurance policies you may consider include (not compulsory):

Accident and Liability Insurance

If your business is likely to be sued,  then you should consider this insurance.  For some industries this is mandatory, for others optional. Further information by industry resources can be found here https://www.business.gov.au/Planning/Industry-information

You might consider this insurance if you:

  • are a company director or senior manager
  • work in an industry that attracts large government fines
  • collect personal data of customers
  • sell, supply, deliver or in some cases service goods or services that could cause damage, injury or emotional distress
  • provide professional advice
  • sign contractual obligations that possibly could go wrong or not be met
Stock, Product and Asset Insurance

If your business would fail from loss of an asset or stock, insurance may reduce that risk and could include insuring for:

  • Building and Contents
  • Farm crops, livestock, machinery
  • Goods in transit either as delivery or perhaps you own assets being moved like a bulldozer
  • Electric or machinery breakdown and or including spoilt stock, for example food
Personal or Loss of Income Insurance

In the event of a disaster to you or your business could you or your family survive a loss of income?  These are both personal and business insurances you may want to consider:

  • Income Protection
  • Life Insurance
  • Disability insurance
  • Business interruption or loss of profits (for specific insured dangers like fire)
  • Management liability (protects personal assets)
  • Employee theft or Fraud
Technology and Cyber Crime Insurance

Criminals are more likely to break into your computer network and damage or steal from your business than break into your premises today. Every year this becomes a bigger issue and you should take steps to protect both your expensive computer hardware and the even more valuable data that supports your business.

SUMMARY – Talk to an Insurance Brocker

Knowing what insurance policies you need can be complicated and we recommend that you speak with a licensed insurance broker or advisor. We also recommend they are licensed which can be checked on the ASIC website. https://connectonline.asic.gov.au/RegistrySearch/faces/landing/ProfessionalRegisters.jspx?_adf.ctrl-state=xxgvmg709_4

Payroll – paying employees

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Within your small business, people are your most valuable resource but unless they are a family member they are unlikely going to work for free.  This means that you will need to pay them.  That sounds easy but you have to deduct income tax, pay superannuation, accrue holiday and sick leave and the list goes on. In this guide, we will look at payroll requirements, explain how you pay tax, and look at some of the solutions to make it easier.

There are 10 minimum entitlements you have to provide to all employees called The National Employment Standards (NES). The 10 minimum entitlements of the NES are:
Maximum weekly hours.
Requests for flexible working arrangements.
Parental leave and related entitlements.
Annual leave.
Personal/carer’s leave, compassionate leave, and unpaid family and domestic violence leave.
Community service leave.
Long service leave.
Public holidays.
Notice of termination and redundancy pay.
Fair Work Information Statement.
Note there are some exceptions for casuals. More details can be found on the NES website

WHY should I care about payroll?

The payroll process is important as a small business need to do two things:
  1. Pay employees the right amount at the right time, every time. Fairwork provides a base pay calculator which can be found here. https://calculate.fairwork.gov.au/FindYourAward
  2. Withhold the appropriate amount of tax, provide that to the Australian Tax Office with the required reports, and as part of this keep accurate records.  You also need to provide the employee with a payslip and keep records for 7 years.

WHAT you need to know about Payroll and Tax

Three types of tax must be paid:
  1. PAYG withholding – Pay As You Go tax is the employer assisting the employee meet their end of year tax liability. You must register to start the process, you must ensure the worker is entitled to work in Australia and you must withhold the tax every time you issue payment to your staff. Details on how to pay this tax can be found later in this guide. More details can be found on your obligations here. https://www.ato.gov.au/business/payg-withholding/
  2. Payroll Tax – This is a state-by-state tax and is a tax on your business not the employee. It is calculated as a percentage of your total wage bill once you exceed a certain threshold. Further details can be found here. Threshold and payroll tax rates, as well as payment requirements, can be found here:
    1. ACT Revenue Office
    1. Northern Territory Revenue
    1. NSW Revenue
    1. Business Queensland payroll tax
    1. Revenue SA
    1. State Revenue Office of Tasmania
    1. State Revenue Office Victoria
    1. WA Office of State Revenue
  3. Fringe benefits Tax – FBT is a tax that employers pay when they provide certain benefits to their employees, including their employees’ family or other associates. The benefit may be in addition to, or part of, their salary or wage package. More details and how to pay can be found here https://www.ato.gov.au/General/Fringe-benefits-tax-(FBT)/ A common example of this may be FBT payable on a company car used for work and pleasure.

A further requirement in the payroll process is the payment of Superannuation.  If you pay an employee more than $450 a month then you must contribute a further legislated amount to an employee’s chosen superannuation fund. https://www.ato.gov.au/Business/Super-for-employers/

Leave is also an entitlement that must be calculated but is not compulsory on the payslip. The types of leave include:
  • Annual Leave – workers accumulate leave from the day they start at a rate of 4 weeks for every 12 months worked. It does not apply to casuals and should be accrued in your accounts so you know that you have a debt that must be paid at some time.
  • Parental Leave – Also known as Maternity leave, it is an entitlement of leave when a child is born or adopted. To be eligible you must have worked for at least 12 months for your organisation and the leave is up to 12 months unpaid. https://www.fairwork.gov.au/leave/maternity-and-parental-leave
  • Sick and carer’s leave – Full-time and part-time employees can take paid leave to help with personal illness or injury, caring responsibilities, and family emergencies. Employees are entitled to 10 days of sick leave for every year of service. Casuals get none. https://www.fairwork.gov.au/leave/sick-and-carers-leave/paid-sick-and-carers-leave
  • Public, Religious, and cultural holiday – Employees are entitled to paid leave on Public holidays that fall on a normal working day.  Religious and cultural holidays do not have entitled leave however if you do not allow employees to celebrate these it can be discrimination.  A simple solution is to celebrate them together through work events.
  • Long service leave – Employees get long service leave after a long period of working for the same employer. Most employees’ entitlement to long service leave comes from long service leave laws in each state or territory.  https://www.fairwork.gov.au/leave/long-service-leave
    (Casuals are entitled to LSL in some states and territories)

Allowances and deductions may also form part of the payment process with additional funds provided for uniforms or travel, normally the subject of some sort of award.  https://www.fairwork.gov.au/awards-and-agreements/awards  Deductions may include a car lease payment or an extra employee-contributed super payment coming out of their scheduled pay.

HOW do you pay an employee properly?

The more employees you have, the more complex your payroll becomes. You might have a mix of employees on hourly wages and salaries. Throw in some contractors, staff on commission, overtime, expense claims, allowances, and leave entitlements, and your payroll can be different every time you run it. Your options are:

  • By hand: Either on paper or a spreadsheet. Note this may not meet tax office requirements.
  • Payroll software:  Apps can calculate pay and deductions and even fill out tax forms for you. Be sure to read our essential guide on payroll software.
  • Payroll service providers: You can outsource your payroll to experts. Some providers will do absolutely everything for you. Others will help with specific tasks.
  • Accountants and bookkeepers:  You do not have to go to a specialist payroll company. Many accountants and bookkeepers can do payroll for you.

Now that you have managed to work out how to pay your employee you also have to report and pay the Australian Tax Office.  You will have to abide by the Single Touch Payroll reporting guidelines. https://www.ato.gov.au/business/single-touch-payroll/in-detail/single-touch-payroll-employer-reporting-guidelines/  You will report to the ATO every payday how much your employees were paid, how much tax was withheld and what contributions were made to superannuation.

HINTS

Be sure to read our essential guides on Superannuation, roster management, and Payroll software.

SUMMARY – Adhere to Government Regulation around Payroll

Paying an employee is a complicated process with government regulation around conditions, awards, and taxation. It is important that you understand and follow the regulation and ensure your employees are paid the right amount on time every time.

There are lots of great tools and assistance available to help make this process easier.

Cloud based solutions

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It is in the cloud, but what is the cloud and why is it useful to me?  There is so much confusion around exactly what cloud-based solutions is so in this guide we will break it down into simple terms and help you understand what it can do for your small business.

Cloud computing is the on-demand availability of computer system resources, especially data storage and computing power, without direct active management by the user. The term is generally used to describe data centres available to many users over the Internet.
A cloud application, or cloud app, is a software program where cloud-based and local components work together. This model relies on remote servers for processing logic that is accessed through a web browser with a continual internet connection.
Wikipedia

WHY should I care there is a cloud?

The cloud has enabled computing power and applications to be accessible to small businesses that previously only large enterprises could afford to own. So what might have cost you upfront tens to hundreds of thousands of dollars before is now available for a low monthly subscription.

Not only can you get access to computing ability cheaply the other big development that has made this all so accessible is not cloud-specific, it is the improvements in the user interface.  Users no longer have to be super technical instead we have user-intuitive ways to take advantage of solutions that help us in our businesses and lives.  The best example here is thinking of using a smartphone now versus using a dumb phone more than 10 years ago.

WHAT is the cloud and a cloud application?

The cloud is a real thing and literally is a whole bunch of computers sitting in large purpose-built buildings that you can essentially hire usage.  For any computing solution to work, you need a computer that runs an operating system and then application software to run a solution.  A solution might be to share/store files, to act as a post office for email, to keep track of how much money customers have in their bank accounts, to bill customers for electricity, to manage inventory, or keep track of the finances.

Traditionally a business would own this computer know as a server and manage it in house – many still do. The cost of buying this, keeping it running, and securing it is expensive. These servers might be busy for certain times of the day and do almost doing nothing other times of the day.

What cloud computing does is enable servers to be shared amongst many users meaning that each server is better utilised thus reducing costs.  It also allows businesses to only pay for the time they use.  The internet provides a means to use this computer power sitting anywhere in the world.

A Cloud Application is the same concept but rather than just buying computer power and storage, you are renting the use of an application to do a job.  Similar to the computers, to create an application is expensive but if you can share that cost with many more users it will dramatically reduce the cost.  Thus business applications that traditionally could only be afforded by the biggest businesses are now via the internet made accessible to small businesses for low monthly fees.

HOW do I take advantage of Cloud-based solutions?

The following essential guides are available on this site for common business solutions including:

Depending on your industry there are many more cloud solutions which if used correctly could save you time and money allowing you to do more to improve your business.  An internet search will help you find them.

Other advantages that cloud computing provides other than the specific solution and cost savings include:
  • Fast integration of the solution.  No hardware setup or software loading required.
  • Access from anywhere you have internet.
  • Application software is always the latest version.
  • Backup solution normally provided.
  • Better reliability of the hardware. Cloud vendors will guarantee less downtime of solution.
  • Expandability of computing or storage as you need it
  • Enables easy collaboration with others, for example, accountant
Disadvantages can include:
  • Performance can vary by vendor
  • You have no control of technical issues (also an advantage)
  • Security of your data not being in-house (also an advantage)
  • No control of downtime
  • Relies on good internet connectivity
  • Increases your internet allowance usage
  • Support may not be to the level you need

HINTS

A consideration you should have is where is your data being stored.  Is it in Australia in the USA or maybe China?  If this is important to you, possibly from a security perspective, you should ask this question before committing.

Most cloud solutions offer a free trial period so you can test drive the solution.

Always make an extra backup copy of your cloud data in your home or office.

SUMMARY – affordable solutions to drive your business

Cloud-based solutions have allowed enterprise technology to be available to small businesses affordably.  By sharing resources to many customers, prices have fallen.  Competition has ensured vendors provide easy-to-use solutions that will benefit your business.

Payroll Software – simplify paying people

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our guide on payroll we discussed the process of paying an employee. Part of that discussion was the actual calculation and processing, we discussed options like using a third party or using software to do it yourself. In this guide we will review what you need to consider in selecting a Payroll software solution.  

Chances are if you are considering payroll software you already have or are also considering an accounting package solution.  Either way you are best to ensure the solution is either built into the accounting package or can be integrated.  This will save you lots of time. See our essential guide on accounting software solutions.

Small business payroll software is a solution used in-house that helps you streamline and automate payroll processing tasks. The software saves time and effort through automation as well as reduces errors vs doing manually. It often includes modules for time tracking, tax filing, and benefits administration.

WHY do I need software to do my payroll?

Benefits of Small-Business Payroll Software

  1. Automation of processes
  2. Reduced labour costs associated with payroll processing
  3. Greater accuracy and lower risks eliminate the possibility of human error. The software can also remind you of deadlines, so reduce your risk of fines.
  4. Integration with existing software, for example, accounting packages or POS systems
  5. Some packages will provides updated tax tables when the legislation changes so that the right PAYG Withholding is used.

WHAT you need to know about the ATO and Single Touch Payroll

As a small business in Australia you need a package that will comply with the Australian Tax Office Single Touch Payroll (STP) https://www.ato.gov.au/business/single-touch-payroll/in-detail/single-touch-payroll-employer-reporting-guidelines/. Larger business may consider a package that includes other HR functions but it is unlikely a small business you would consider this. Like the accounting, POS, and eCommerce software solutions the Payroll solution is most likely to be cloud-based bringing functionality at a reasonable price.

HOW do I make a decision on which Payroll Software

Features you should consider:

  • Designed for the Australian Tax System and reporting requirements
  • Performs Single Touch Payroll reporting
  • Direct deposit functionality into employees’ bank accounts
  • SuperStream standard compatibility for Superannuation compliance
  • Ability to integrate with other cloud-based software solutions you are using. This will reduce the workload
  • Additional information can be printed on the employee payslip such as annual leave owing
  • The ability to support employee deductions or allowances for example, car leasing or uniform allowance
  • Leave management including annual, sick, and long service
  • Employee portal to update banking details or enter leave
  • Mobile access from your smartphones, both for administration and employee
  • If employees clock on and off, the ability to integrate this process
  • Flexibility to handle employment options including variable hours, bonus payments, contractors, etc
  • New hire integration without external assistance
  • Reporting functionality including leave reporting
  • Alerts or reminders, for example, payment was not successful or Super payment is due
  • Security. Remember all your wage information is on the cloud.  Consider in which country the information is hosted
  • Legislation updates.  How quickly will the software be updated to abide by any new Government legislation?
  • Support.  Various support or training might be available either included or at a cost.
  • Cost and cost of extra features

HINT

Make sure your software choice will does not have any compatibility issues with your and your employee’s bank account intergration. Also ensure the bank will process payments overnight so employees can draw cash the next day.

SUMMARY – Easy Payroll

This software can be accessed inexpensively and will make your life easier. More info on vendors can be found by searching for small business payroll software Australia.

Roster Management for scheduling staff

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John wants Friday off to go to the dentist, Beth cannot work Fridays and Liam is on holiday.  So, who can work on Friday?  For many small businesses rostering staff is a constant challenge. This guide will help you select a roster management software solution by helping you understand what you should take into account.

Rostering software provides a small business with a simple and intuitive method to manage staff rosters and shift structures. Most modern scheduling software also integrates with a host of other services like POS, accounting, payroll, data storage, HR systems, and more.

WHY do I need Roster Management Software?

WHY do I need Roster Management Software?

When done successfully, productivity is maximised and sales are not overrun by labour costs. Week after week, month after month, this task needs to be repeated again and again. This can become a tedious and error-prone process if done manually or on a spreadsheet.

WHAT are the benefits of scheduling software?

  1. Improving communication. Developing and maintaining a strong line of communication with your staff is one of the most important aspects of running a successful business. Many common staff scheduling miscommunications can be prevented.
  2. Increasing accuracy and efficiency. Quickly create, view, and modify schedules, handle leave requests, and keep in contact with employees about scheduling needs. Some programs include automatically populating fields, which help you spend less time manually entering names and numbers.
  3. Maintaining compliance with government regulation. Scheduling applications can be used to automatically track employee hours to prevent law violations. This feature is especially useful for companies that have employees who can legally only work a certain number of hours, such as minors or people receiving disability pensions.
  4. Monitoring labour costs. Scheduling software makes it easy to record hours and payroll data, providing valuable insight into current and future expenses. This allows you better control over budgeting and overtime costs.

HOW do I select the right Roster management solution?

Cloud-based solutions have made this software accessible and affordable to small business and you should consider the following when selecting a vendor:

  • Support – Services to help get you set up and provide the ongoing support you no matter what time of day.
  • UI – User Interface is how the information is presented. Understand how easy it is to use and its ability to be customised.
  • Job library – Ability to have different job roles and to flag which employees can perform which roles. For example, differentiating between a cook and a server.
  • Locations – If you have multiple locations the ability for an employee to be set to only work at one location or both.
  • Employee onboarding – allows paperless capture of essential contact details, tax file number, and superannuation details for new employees.
  • Shift swapping – Allows employees to swap shifts amongst themselves with or without the manager’s approval.
  • Employee availability – Both the ability to drop a shift an employee cannot make or set rules like I am not available every Friday.
  • Employee rules – Ability to set a rule such as Jane is not to be rostered on with Rudy.
  • Forecasting – The ability to have the right number of staff scheduled for a busy Saturday versus a quiet Monday.
  • Employee portal – The ability of the employee to log on via a PC or smartphone to view or administer their schedule.
  • Access – Ability for manger and workers to adapt to last-minute changes like replacing
  • Smartphone access – Ability for manger and workers to adapt to last-minute changes like replacing a sick employee remotely.
  • Auto schedule – Allows artificial intelligence to recommend the best roster with a single click.
  • Schedule alerts – employees decide how they want to get alerts of schedule updates—either via email, SMS, or simply through in-app messages.
  • Group announcements – share company-wide posts including files.
  • Leave management– keep track of employee leave entitlements.
  • Payroll & accounting integration– Integration with your other software solutions to provide integrated information for simplicity and planning. (See our essential guides on Accounting, Payroll, and POS software)
  • Time Clock – Real-time capture of working hours electronically.
  • Reporting – One area that separates good shift planning platforms from average ones is reporting. When they are forecasting shifts, businesses such as restaurants and retail stores need to know what their labour costs will be and how that relates to sales. When integrated with an accounting or POS solution, rich data can help you better plan for events like Christmas sales.
  • Security – Ensure employees can only log in as themselves and that it is simple and secure.
  • eLearning – Ability to have an online training library to ensure staff have the right skills.

This software solution is usually priced per employee per month.

HINT

Roster management software only makes sense when your staff do not work standard working hours like 9 to 5.  We also see the benefit really kicking in when you are trying to manage a larger workforce.

Various vendors can be found by googling small business roster management Australia.

SUMMARY – Save time and frustration

This software solution will reap more benefits the more complicated your staff rosters are and the higher the number of people.  This is one of those tools that, once you implement, you will not survive without.