Payroll Tax: What is It and Why is It Important to Pay?

If you are a business owner, you must know about payroll tax from the moment when you hire your first employee. It is for employers and based on the amount of the monthly wages paid to the temporary, permanent and casual employees and certain contractors. You can seek help from taxation accountants if you find difficulty understanding payroll taxes. To know more about payroll tax and its importance, keep reading this blog:

What is Payroll Tax?

Payroll taxes are considered financial obligations you and your employees are liable to pay. There are several types of payroll taxes – some are paid to the federal government and others are paid to the territory or state authorities. When it comes to the payroll tax, it is paid to the territory and state authorities on the money that employees earn. Being an employer, you need to calculate an estimate of those taxes and pay them to the government authorities on your employees’ behalf. If you don’t know how to calculate payroll tax, you can opt for taxation services where a tax accountant will help you.

What do You Need to Register for Payroll Tax?

If you are registering for payroll taxes, then you might have to submit a few details. Once you start entering details, they can’t be undone. Usually, you need:

• Australian Business Number (ABN)

• Contact, address, and bank details

• The date when you first employed staff

• All payments to employees for the existing/current year and the four previous years, including:

1. Fringe benefits

2. Wages and salaries

3. Termination payments

4. Allowances

5. Contractor payments

6. Director fees

7. Commissions and bounces

8. Shares and options

9. Employer superannuation contributions

You can hire Australian taxation accountants for your company so you can rely on them for payroll taxes. The detail that you need to provide while registering for payroll tax may differ from state to territory.

Why is It Important to Pay Payroll Tax?

When you think of payroll tax, it is important for the proper functioning of the tax system. State, territory and federal authorities depend on the employers to accurately calculate, evaluate, and submit taxes to ensure the tax system is operating properly. If you don’t have enough time to look after these types of taxes for your business, then it is advisable to seek help from taxation accounting services. Payroll tax finances the territory or state’s budget where the workers work. It also ensures that employees don’t need to pay a total sum of taxes at the end of the financial year.

Is There Any Difference Between Income Tax and Payroll Tax?

Yes, income tax and payroll tax both are different. The primary difference between income tax and the payroll tax is that payroll tax depends on the amount you pay your employees and contractors as wage. On the other hand, income tax depends on the business’s taxable earnings. When you or your taxation accountant in Melbourne calculate your payroll tax, then your company’s income is not considered.

Do You Need to Pay Taxes on Payroll?

As an employer, you are required to pay taxes on the payroll if your total payroll exceeds or meets a threshold that is usually determined by your territory and state authority. When the tax is collected and paid by the employer, it means the amount is coming from the employees’ wages. You can check whether you meet or exceed a threshold according to the limit set by your state or territory authority. Thus, it is important to understand the federal regulations and state or territory authority to know where you have a tax obligation. Despite this, you need to have accurate business books before you calculate to pay any tax. For this purpose, it is advisable to hire a Melbourne bookkeeper.

Conclusion

You need to have an extensive amount of knowledge to ensure the accuracy of payroll taxes. If you want to make sure that your company calculates and submits your payroll taxes on time and accurately, then it would be the best idea to hire a tax accountant for your company. If you are running a business, it is important for you to pay all types of taxes to which you are liable to avoid any type of penalty or fine. Moreover, you can also seek help from Reliable Melbourne Accountants for accounting solutions for your business. 

Tips for Finding the Right Tax Accountant

The services provided by an accountant can be inestimable to the trade. Despite the great job done by the bookkeeper to keep records, there is a need of the tax accountant to handle the bewildering tax laws and provide the financial advice to administer and spread business. Moreover, besides being just a tax preparer; an accountant can help to build a prototype for the outlook of the business. Hiring a tax accountant can make paying taxes much less annoying and they’ll consequently be able to help to hold onto every dollar that one is entitled to. A good accountant will be capable of telling how such a move would affect the taxes and/or the business's expansion.

However, finding a good tax accountant isn’t always a straightforward task. Since you are trusting some of your most personal and important information with them, your tax accountant needs to meet the highest standards. Furthermore, you need someone you can perform well with and look to for supervision about your finances.

How to Find a Good Accountant

Categories Of Tax Accountants

One will be able to find the right tax accountant if one is confident about for whom they are looking for. It’s important to examine what kind of tax accountant they need before they begin the search. There are some significant variations amongst different types of tax accountants. The three most common types of tax accountants are Certified Public Accountants, Enrolled Agents and tax attorneys.

Certified Public Accountants

It is a designation given to the individuals who clear the uniform CPA exam. Moreover, they meet the specific requirements regarding education and experience. CPAs are subject to the code of ethics. Most of the CPAs do tax accounting. A CPA can represent a firm that is dealing with an audit or have the payment arrangements with the IRS.

Enrolled Agents

 An enrolled agent represents the taxpayers before the Internal Revenue Service. They have also passed adamant verification and history checks as performed by the IRS. An EA is a person who specializes in sophisticated tax positions and they can also represent you if you have an IRS audit.

Tax Attorneys

Tax attorneys are responsible for managing compound tax issues like estate planning, international business or going to the tax court. They have specialized degrees in taxation and law. A tax attorney can guide a firm where the tax situation is very complicated and includes significant legal matters.

Referrals

By using the Internet or Yellow Pages, one can surf the number of accounting firms. If this method seems to be irrelevant, one can find out who other business people use and how satisfied they are with the services their accountant provides. When you call, tell the receptionist what you do and ask for the name(s) of accountants familiar with your type of business this information can be shortlisted for prospective accountants.

Prepare a list of questions you want to ask accountants

Don't be shy about asking about billing. Ask about billing rates and how these are determined. Often you may have a quick question that can be answered via a short phone call or email - how do they bill phone or email advice?

Moreover, one can ask about Licenses and designations they have. The period since he is working in the tax business. The tax issues in which he is specialized. Also, whether he outsource any of his work or he does it himself. It is also good to ask him that in how much time he will take to finish the taxes. One can also ask about the privacy policy and about not to share the tax information with the third party.

It's important that you choose an accountant that is familiar with the special requirements of your business and/or your tax situation so you can use these to potential accountants. For example:

• E-COMMERCE - If your business is internet-related, you'll want to find out if the accountant is familiar with e-commerce.
• INTERNATIONAL TAX ISSUES - If your business is spread overseas, you need an accountant who is proficient in international tax issues.
• EXPORT STRATEGY - If you're thinking about exporting, ask how an accountant might help you develop an export strategy.

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How to Hire Professional Accountant

“Who will count my money and communicate with regulatory authorities?” - these are the questions that every business owner faces, moreover, from the very beginning. Often an entrepreneur decides to take on such tasks. This is justified when starting a business or for small firms with simple financial transactions. On average, a businessman without an accountant spends on accounting from 10 to 30% of the working time and manages to do business quite well. But if accounting and reporting take away a lot of your strength and frighten you with its complexity, then the decision to hire a professional accountant comes by itself. And here are the options:

• Order accounting services on the terms of outsourcing

• Hire an accountant for a permanent job.

How to Find an Accountant for Outsourcing?

Transparent and convenient accounting services under the control of the circuit.

Remote accounting support is great for small businesses. You transfer accounting and reporting to professionals to throw all your energy into business tasks. This is especially convenient if the organization or individual entrepreneur does not yet have employees. After all, when you hire an accountant in the state and become an employer, you have a lot of additional responsibilities and reporting forms, and with the new responsibilities the work of the accountant, to whom you pay money, is added. Medium and large firms also often outsource certain accounting processes - for example, payroll.

Modern services allow you to establish work with partners via the Internet. So you can easily transfer primary documents to the accountant and receive reports on completed tasks.

How to Hire an Accountant in the Company?

For medium and large enterprises, the volume of accounting operations requires more attention. And the manager increasingly wants to discuss financial issues with an accountant. The tax system also affects the complexity of accounting. And when the remote employees no longer satisfy the needs of the company, it is time to take a specialist to the staff. The company will have to allocate funds for the maintenance of a new employee, but all arising tasks will be resolved promptly.

The accountant in many firms becomes person number 2. So it is very important to choose a professional whom you can trust. 

How to Verify the Professionalism of an Accountant?

First of all, pay attention to the quality and reliability of the accountant, because this person will have access to confidential information about your company. If you are poorly versed in accounting and tax law, invite a trusted and competent assistant to select candidates. And with it, pay attention to a number of conditions:

• Professional skills: the future accountant should understand the legal framework, paperwork, accounting methods, reporting.

• Work experience: study the candidate’s diploma and workbook, ask questions about previous jobs. It is good if the accountant worked for an entrepreneur with a similar type of activity. Important and experience in a particular tax system.
• Knowledge of information technology: the candidate must have working skills in modern accounting programs, be aware of basic accounting services and resources where you can get relevant information.
• Personal qualities: responsibility, attentiveness, perseverance, patience are important qualities for an accountant, they should not be underestimated.
• Sociability: you will need to build a comfortable business relationship with an accountant. Think about how easy it is for you to communicate with this person.
• When choosing an accounting company for outsourcing, pay attention to all of the conditions listed above, as well as the situation in the office. Check for software and licenses. Study the draft contract and find out if you can get a test period for the provision of services. Try to find customer reviews of this company.

Accountant found! Employee Registration Procedure

Now it remains to worry about the workplace for a new specialist, prepare the necessary documents and complete personnel and legal formalities:

• Add the position of an accountant to the staffing table.
• Prepare the job description of the accountant.
• Sign the employment contract with the candidate for the position and familiarize him with the job description.
• Issue a job order.
• Make an entry in the workbook of the accountant.

 If you OPT for Remote Accounting

You are convinced of the reliability of the company to which you want to outsource accounting. Now you need to perform a number of formalities - as a rule, the company itself will instruct you on further actions. 

• Sign a contract with an accounting firm.
• Hand over the constituent documents, primary documentation and other documents to your remote accountant. In most cases, originals are transferred, which are then stored in an accounting firm.
• Be in touch, continue to transfer the primary accountant in the agreed manner.

We hope that cooperation with a new accountant or tax accountant will bring your company clarity in business and new income!