Country manager at Xero New Zealand
In just a few months, New Zealand businesses are going to experience some major changes to the way they look after paying their staff.
Inland Revenue’s systems and processes are being modernised so that businesses can manage payroll in the digital age. Tax reporting and compliance will soon become much easier for businesses, but that doesn’t mean it’ll happen without payroll administrators subscribing to a new way of doing things.
Whether you’re the one in charge of a business, or you’re an advisor helping with the accounting side of things, chances are you’ve been frustrated with PAYE in the past. Every organisation’s payroll needs to not only be accurate and flexible, but also account for annual leave, seasonal work, contractors, variable rates, and more.
Running a business in the cloud is becoming the norm; especially when it comes to managing finances and accounts. Inland Revenue is changing with the times to suit the new reality of integrated payroll systems.
These software and accounting programmes mean information is now flowing seamlessly between the business, the bank, the accounting system and the employee, enabling small business and their advisors the possibility of reconciling in real-time. And, specifically when it comes to Inland Revenue, online reporting and filing.
Now is the time for enterprises to plan for the change to the payroll status quo that’s coming their way on April 1, 2018.
First thing’s first: finish all your pay runs for the financial year. Get things squared up and in check, so that you’re not fussing with old accounts that need reconciling as you and your advisor navigate the 2018 changes.
The most significant change to be aware of is the removal of the payroll subsidy. Currently the business cost of a PAYE intermediary is partly or fully subsidised for small businesses. This is a throw-back to the first few years of online tax filing, where PAYE information was assured by using a listed payroll intermediary. Removing the subsidy confirms there is no longer a case to subsidise one type of payroll service over others.
If you are one of those receiving that subsidy, do your homework and plan ahead for your next financial year so you’re not caught short.
Start researching online tools that can help you get the most out of your current accounting software. All of the best apps and online services integrate with software that is easily connected to, like cloud-based accounting options like Xero.
Once you’re connected to the cloud, there are a whole bunch of options that become open to you now that your accounts are no longer tied to a desktop. Whatever you choose to implement in the next financial year, plan for the transition now so there are no PAYE hiccups.