Payroll management guide for businesses

Payroll management helps businesses pay employees on time and comply with all tax laws. When done right, your business can save time and money by running payroll efficiently and accurately. However, running it with a gung-ho attitude and a lack of understanding can be time-consuming and fraught with risk.

Visory runs bookkeeping, payroll, accounts payable and accounts receivable for growing Australian businesses. A dedicated team, working with Visory’s AI, Delphi, under that team’s oversight, runs the pay cycle so you can spend less time on it.

Here’s what to know about payroll management for your business and how to strategically build a system that works best for your company’s needs.

What is payroll management?

Payroll management is how your business calculates, tracks, and distributes payroll at your company. It can also help you plan and budget for hiring future employees and growing your business. For example, some payroll platforms also include human resource (HR) functions like onboarding new employees or reviewing performance.

You may use payroll software to manage and automate some parts of the payroll process. But, these tools don’t automate everything. You still need an expert to manage the day-to-day, check for accuracy, and understand your payroll data.

In general, payroll management includes:

• Tracking time
• Preparing pay runs
• Making employee payments
• Calculating and paying superannuation
• Withholding tax (PAYG withholding) and reporting it to the ATO

Why payroll management is important

A well-run payroll management system is invaluable to a company. Without a payroll management system, there may be lost, inaccurate, or late payments, which damages relationships with employees.

It can also lead to costly and avoidable mistakes. For example, employers need to comply with the Australian Taxation Office’s (ATO) Single Touch Payroll (STP) reporting system, which requires each pay run to be reported on or before payday. Late reports can attract a failure to lodge on time penalty: 1 penalty unit for each 28 days overdue, up to 5 penalty units. A penalty unit is $364 for infringements on or after 1 July 2026.

The penalty is multiplied for larger employers. Size is set by withholder status or by assessable income or GST turnover ($1m to under $20m is medium, $20m or more is large), whichever gives the higher penalty. For infringements from 1 July 2026, the maximums work out as below.

• Small entities: $1,820
• Medium entities (2 times): $3,640
• Large entities (5 times): $9,100
• Significant global entities (500 times): $910,000

STP Phase 2, which started on 1 January 2022, requires a more detailed breakdown of each employee’s pay. From 1 July 2026, STP reports must also include each employee’s qualifying earnings and super liability, as part of Payday Super. It’s better to be prepared and compliant, so you don’t have to worry about penalties.

On the other hand, strong payroll management can benefit your business through:

• Accurate and timely payments
• Correct payroll taxes and compliance
• Faster pay runs that take a fraction of the time
• Less time and money spent managing payroll and staff benefits

What payroll management does

Payroll management includes all the steps to calculate and remit payments to employees and the government. Tasks may include:

• Collecting new hire payment information
• Organising and tracking time sheets
• Calculating employee wages
• Tracking annual leave, personal leave, parental leave, and other leave
• Calculating tax withholding and remitting these to the ATO
• Calculating super and paying it to each employee’s fund
• Issuing payslips (within 1 working day of payday)

The payroll management process

There are several phases in the payroll management process including pay run preparation, calculation, reviews, and processing. Optimising each step in the payroll process can help improve your business in various ways.

1. Pay run preparation

Pay run preparation is when you collect all the information you need to run payroll. It can include tax file number (TFN) declarations and super choice forms at the time of hiring, and weekly time sheets.

Here are some other examples of data you’ll need for pre-payroll:

• Hours worked
• Tax information
• Annual or personal leave
• Parental leave
• Employee attendance/absence
• Superannuation changes
• Leave requests and returns to work
• Redundancies

2. Pay run calculations and review

When it is time to run payroll, you must take each employee’s gross pay and calculate deductions to get net pay, or take-home pay. Employers withhold PAYG tax from gross pay and make any agreed deductions, such as salary sacrifice. Super is calculated as 12% of each employee’s qualifying earnings and paid on top of their wages. Each pay run should be reviewed and approved before anyone is paid.

3. Pay run processing

Once calculations are finished, businesses must ensure that all money goes where it is supposed to. This includes paying employees, reporting the pay run through STP, and paying withheld tax to the ATO. From 1 July 2026, super must also reach each employee’s fund within 7 business days after payday.

It also includes keeping employee pay records. The ATO requires businesses to keep tax and super records for five years, and the Fair Work Ombudsman requires time and wages records to be kept for seven years, including employer super contribution amounts, pay periods, payment dates, funds and fund-choice details. The ATO’s five-year minimum does not shorten that obligation. Records include:

• Employee salaries and wages
• Super contributions
• Employee bonuses and tips
• Fringe benefits

Ways businesses can run payroll

How you track and manage payroll at your company often depends on the size and number of employees. In Australia, most employers report payroll through STP-enabled accounting or payroll software. Although software and STP have made payroll easier, it still takes time and expertise to run it accurately and efficiently.

You can make running payroll easier by:

Outsourcing payroll

Working with an expert to outsource your payroll services can help to make sure that:

• Processes follow current rules
• Time tracking is complete
• Pay amounts are accurate
• Taxes are properly withheld
• Award rates are updated when they change, including each 1 July
• Superannuation is correctly calculated

Outsourcing options aren’t only for small companies that lack funds to staff an entire payroll department. Companies of all sizes outsource payroll so they can get valuable expertise that can improve their overall business.

Using payroll software

One of the major benefits of payroll software, other than reporting through STP, is that it automates some time-consuming functions.

At Visory, our payroll team works with the payroll software our clients use, including Employment Hero, Xero, MYOB and QuickBooks. Software handles the calculations; the team checks each pay run and keeps the records in one place.

How Visory helps with payroll management

Running payroll is not the most exciting part of running a business. Visory can help you with payroll management so that you have more time to spend actually running your business. When you work with Visory, a dedicated team handles your payroll, bookkeeping, accounts payable and accounts receivable, with Visory’s AI, Delphi, working under that team’s oversight.

Visory runs payroll as part of the finance function for growing Australian businesses. To learn more, see how Visory works in practice or book a discovery call.