Payroll basics – what happens every time you pay an employee
Once you hire an employee, paying them is not just a bank transfer.
Each pay run also involves tax, superannuation, and reporting to the ATO.
What happens every pay run
Every time you process payroll, you need to:
- calculate wages
- withhold PAYG tax
- calculate superannuation
These happen at the same time — every pay cycle.
Reporting to the ATO
The pay run is also reported to the ATO through Single Touch Payroll (STP). This includes:
- wages paid
- tax withheld
- super obligations
This reporting happens automatically through your payroll system.
Before your first pay run
Before you can process payroll, you need:
- employee TFN details
- super fund information
- agreed pay terms
Common mistakes
Most mistakes happen at the start. Common issues include:
- incorrect tax withheld
- wrong super amounts calculated
- missed reporting obligations
These issues usually come from poor setup, not complexity.
Why software matters
Using a payroll system makes this process significantly easier. Payroll software:
- handles calculations automatically
- processes STP reporting
- keeps everything in one place
The choice of system affects how payroll is managed in practice day to day.
Final note
Payroll is a repeating process.
If set up correctly, it becomes routine. If not, the same errors repeat every pay cycle.