Training Session 13 04 02 2021 Payroll explanation intro 2

Summary

The video script is an in-depth guide on payroll management, discussing its impact on business finances and legal obligations. It covers various business structures, employee types, and the importance of understanding gross vs. net pay. The speaker plans to share resources for further reading and emphasizes the need for employees to understand their roles and entitlements. The script also highlights the process of setting up new employees in accounting software, including forms for tax file numbers and employment contracts.

Takeaways

• 📅 Payroll is a multi-day process that involves various concepts and is not rushed through each day.
• ⏰ The speaker plans to cover topics generally and then send reading materials for deeper understanding.
• 💼 Payroll impacts both the Profit and Loss (P&L) and the Balance Sheet, highlighting the financial implications of hiring employees.
• 💰 The cost of hiring includes gross salary, superannuation, and other payroll costs, all of which are reflected in the P&L.
• 📉 The Balance Sheet tracks obligations like superannuation payable and income tax deductions, which are not immediately paid out.
• 📈 Unbillable time, where employees are not directly generating revenue, is a factor in calculating the true cost of an employee.
• 🏢 Different business structures like PTY, companies, limited companies, trusts, sole traders, and partnerships can employ people.
• 👩‍💼 The types of employees include full-time, part-time, casual, fixed term, shift workers, probationary, apprentices, and trainees.
• 📝 New employees are required to fill out forms such as the Employee Information Form and Tax File Number Declaration.
• 🔗 The Tax File Number Declaration is crucial for tax purposes, ensuring accurate tax withholding and compliance with the tax system.
• 📚 The speaker emphasizes the importance of understanding and being familiar with the terminology and processes, rather than memorizing all details.

Q & A

What is the purpose of the speaker's discussion on payroll?

The speaker is discussing payroll to provide an understanding of its concepts, its impact on profit and loss, and the balance sheet, as well as to prepare the audience for the practical aspects of managing payroll obligations and compliance.

How long is the speaker planning to spend on the payroll topic?

The speaker does not specify an exact duration but mentions it will take a few days, with each session lasting around 45 minutes unless a natural stopping point is reached sooner.

What are the different business structures mentioned in the script?

The different business structures mentioned are Pty (private companies), limited companies (public), trusts, sole traders, and partnerships.

Why is it important to consider the impact of hiring an employee on the profit and loss statement?

It is important because hiring an employee adds costs to the business, including both productive and unproductive time, which must be evaluated to ensure the business can afford the new expense without negatively impacting profitability.

What does the speaker mean by 'unbillable time'?

Unbillable time refers to the period when employees are being paid but are not directly generating revenue for the company, such as during training or when performing tasks that do not contribute to client work.

How is the employee's gross salary represented in the profit and loss statement?

The employee's gross salary, including all associated costs like taxes, is represented as a cost in the profit and loss statement, divided by 12 months to show the monthly expense.

What is the role of superannuation in payroll?

Superannuation is a mandatory pension contribution that employers make on behalf of their employees. It is tracked in the balance sheet under 'superannuation payable' and is paid out to relevant pension funds.

What is the difference between gross and net pay mentioned in the script?

Gross pay refers to the total salary before any deductions, while net pay is the amount an employee receives after taxes and other deductions have been subtracted.

What are the various types of employees mentioned, and why are they important to understand?

The types of employees mentioned include full-time, part-time, casual, fixed-term, shift workers, daily/weekly hire, probationary, apprentices/trainees, and outworkers. Understanding these types is important for managing payroll, benefits, and legal obligations appropriately.

What is the significance of the tax file number declaration form?

The tax file number declaration form is crucial as it provides the employer with the employee's tax file number, which is used to group all of the employee's earnings for tax purposes and ensure the correct amount of tax is withheld.

What is the process for setting up a new employee in the company's payroll system?

The process involves sending the new employee several forms for completion, including an employee information form, a tax file number declaration, and a contract. These forms collect necessary information to set up the employee in the accounting software like Xero and ensure compliance with tax and employment laws.