There is something obvious to most people in business. Payroll is a minefield.
It almost seems the media has been awash in recent months, with stories of businesses who have been fined significant sums resulting from deliberate or incidental errors in payroll calculation and award interpretation.
There are three distinct elements in payroll and each demand their own level of competence. There is a management role, a financial element and a comprehension element. Sitting over that is the Fair Work Ombudsman and the ATO, who both have a role in policing their respective oversight responsibilities.
Processing payroll can be a huge cost to a business. And we know many business owners see those costs negatively. Unscrupulous business owners take advantage of unknowing and partly trained employees simply so they can save one or two dollars – perhaps, in some cases, thousands. Others continue with inefficient practices and obsolete software solutions which invisibly add significantly to their costs.
Business owners are more and more driven to seeking advice from external advisers, particularly lawyers, accountants and bookkeepers, each of whom has a different level of understanding of the issues. It’s important to understand that none of these groups can lay claim to understanding all the issues.
Lawyer “A”, for example, might be an expert in Corporations Law, but have little working knowledge of the Fair Work Act or the content of awards in particular. Lawyer “B”, a relatively junior practitioner, might know more about employment law than his boss. An accountant might be very familiar with Tax Law, but have little concern with anything else. Your bookkeeper, who is rarely consulted on any issue other than how to process a bank payment, may well be the only person who is specifically qualified in payroll management.
For years, software developers have delivered progressively improving tools to simplify payroll processing. With the advent of the cloud as a mature and viable platform, new entrants have taken the market by storm.
KeyPay, for example, has developed a powerful cloud payroll and staff management solution from scratch. It goes about its business of continually developing and improving its product, so payroll professionals can go about theirs.
While software developers have helped to simplify payroll, our legislators have worked very hard to make it more complex. As legislation around employment has marched on and become more and more complex, legal firms and HR companies have provided support, often at significant cost.
There are now affordable cloud solutions which provide specific advice to professionals who work with small and large business.
The Tax Practitioners Board and Fair Work, in consultation with organisations such as the Institute of Certified Bookkeepers and the Australian Payroll Association, have worked quietly in the background towards a workable solution. Recent changes to the scope of BAS agent responsibilities now position qualified bookkeepers, as well as tax agents, as “go to” professionals for payroll advice.
The future of payroll processing
There are plenty of people who think they know the answer. The only thing for certain is that processing payroll tomorrow, will be different to the way we do it today.
Already smart software like KeyPay, will get smarter. Information about tax withheld, student loan repayments, child support and superannuation will transmit to the tax office instantaneously. In time not only information will transmit, but so too will the money.
Despite that, we will still need some human intervention in the process.
Industrial Awards are not likely to become easier to understand. As a result, errors will be more common. People who touch these aspects of running a business infrequently, will find it more and more difficult to keep up. Their value to an employer will diminish. More and more business owners will turn to properly qualified external suppliers.
Who’s qualified then?
Simply, your local payroll expert.
Forward thinking and qualified bookkeepers and accountants, who are also BAS or tax agents, are positioning their firms to meet the need. No doubt those who are closest to their clients will succeed. In time employers will understand that they are the winners.
Opinion piece, contributed by Kieran May, Director accross business