Taking on your first employee is a big step. Getting the set-up right from the start avoids underpayments, penalties and stress later. Here is a checklist for New South Wales businesses.
Before they start
- Confirm they are an employee, not a contractor. The difference affects tax, super and workplace obligations.
- Register for PAYG withholding with the ATO before you make the first payment.
- Check the award or agreement that covers the role, and the minimum pay rates. The Fair Work Ombudsman’s Pay and Conditions Tool can help.
- Arrange workers compensation insurance. In NSW, most employers need a policy through icare.
- Set up payroll software that reports through Single Touch Payroll (STP), such as Xero, MYOB or QuickBooks payroll.
On their first day
- Give them the Fair Work Information Statement (and the Casual Employment Information Statement if they are casual).
- Ask them to complete a TFN declaration.
- Give them a super standard choice form. If they do not choose a fund, you may need to request their stapled super fund details from the ATO.
- Record their bank details, emergency contacts and agreed hours.
Every pay run
- Withhold the right amount of tax using the ATO tax tables.
- Report each pay through STP.
- Give a payslip within one working day of payday.
- Pay superannuation guarantee contributions on time. Rules on when super must be paid are changing, so check the ATO’s current guidance.
Ongoing
- Keep employee records for seven years.
- Track leave entitlements.
- Watch your total wages: payroll tax applies once they pass the NSW threshold.
- Finalise STP data at the end of each financial year.
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