Hiring your first employee is super exciting, you are expanding and growing, maybe this is one of those tipping points where you feel like you have made it in business (those moments just keep on coming!). But before you rock out that happy dance, run through this checklist to mitigate some of the legal risks associated with employing staff.
~ Check off your legal obligations.
Entering into an employment relationship is a legally binding contract, whether you sign a contract or not (we highly recommended that you do in fact have a contract in writing), so there are a few things you need to consider.
If you haven’t already completed your recruitment process, check out this blog post for tips on effective recruitment preparation.
- Confirm your potential employee is legally allowed to work or contract in Australia
- Australian and NZ citizens can legally work here, those on some visas can also work, check which, if your candidate/s include visa applicants
- Will you be entering into an employee/ employer relationship or will the other person be a contractor?
- This is an important factor affecting tax and superannuation as well as other obligations such as entitlements.
- Do you need to register for payroll tax?
- Check the threshold for your state/territory.
- Do you need to register for PAYG withholding of tax?
- This can be applicable for employees, some contractors who do not provide an ABN, or, if both the contractor and employer have decided to enter into a voluntary PAYG withholding agreement, then it applies to the contractor in this instance.
- Do you need to pay superannuation?
- Employee relationships require this of an employer, however, some contractor relationships also require super to be paid.
- Are you going to offer any fringe benefits?
- If so, register for fringe benefits tax.
The Australian Tax Office has detailed info on each aspect, or we can help you out. Be sure you don’t fall into costly employment traps by not doing your homework!
Follow KBR Consulting for upcoming posts about how to effectively engage and retain those new employees.