Payroll isn’t just about paying people—it’s about paying them correctly, on time, and in line with compliance requirements. If you’re managing payroll in-house, here’s a checklist of essential things to consider to avoid costly mistakes, frustrated staff, and unwanted attention from the tax office.
1. Payroll Software: Choosing the Right Tools
What payroll software are you using, and does it handle all your needs? Not all systems are created equal, and the wrong software could mean compliance headaches, manual workarounds, or inaccurate calculations.
2. Pay Frequency and Pay Cycles
Are your staff paid weekly, fortnightly, or monthly? Do you have multiple pay cycles running at the same time? More pay cycles = more complexity, so ensure your setup is efficient and manageable.
3. Pay Date vs. Processing Date
When do staff expect to be paid, and when do you actually process payroll? If your payroll isn’t processed in time, payments may be delayed—and unhappy employees don’t stick around long.
4. Banking and PAYE Management
- Do you need direct access to your business banking for payroll payments?
- Are PAYE payments made per period, twice monthly, or via a PAYE intermediary?
- Getting PAYE wrong can be an expensive mistake, so make sure you’re compliant.
5. Employment Types and Work Patterns
Are all your staff on the same employment basis (full-time, part-time, casual, contractors)? Different work patterns can affect how leave entitlements, public holidays, and payroll tax obligations are handled.
6. Public Holiday Treatment
Public holidays—especially regional ones—can throw a curveball at payroll. What happens if a public holiday lands on your usual processing or payment date? Are you handling entitlements correctly? Spoiler: Many businesses get this wrong.
7. Payments Beyond Base Wages
- Do you pay taxable or non-taxable allowances?
- Are commission or bonus payments handled correctly?
- Are you paying staff per piece of work completed (piecemeal)?
These payments can affect tax obligations and reporting—make sure you understand the rules.
8. Wage Cost Allocation & Accruals
- Do you track payroll costs by department?
- How are wages posted in your accounts?
- Are wage and leave liabilities properly accrued?
Mismanaging payroll costs can cause financial reporting nightmares.
9. Payroll Approvals and Contacts
- Who is responsible for approving wages?
- Who is the go-to person for payroll issues?
- Is there a backup payroll contact in case of absences?
Payroll delays due to missing approvals or staff absences can be avoided with clear processes.
10. Managing Leave & Timesheets
- How do staff submit leave requests?
- How do they submit timesheets (if applicable)?
A messy system leads to errors, disputes, and potential non-compliance with employment laws.
11. Onboarding New Staff
What’s your process for setting up new employees in payroll? Missing key details—like tax codes, bank account info, or KiwiSaver contributions—can lead to incorrect payments and extra admin headaches.
Final Thought: Is Payroll Taking Up Too Much of Your Time?
Payroll is a critical function, but if it’s taking you away from running your business, it might be time to rethink how you manage it. Getting it wrong can lead to fines, frustrated employees, and unnecessary stress.
If you’re finding payroll overwhelming, consider outsourcing it to experts who do this all day, every day. (We know a team who could help… 😉)