Overwhelming; a word that often comes to mind when new employers are first introduced to the complexity that is payroll in NZ.
We don’t blame you either. While there’s an abundance of information out there, it can often be hard to pinpoint exactly where to begin and which route to take (yes, there’s more than one and some are more lengthy than others).
The payroll route you take depends on whether you have chosen to tackle all of your payroll obligations by yourself, or you have opted to share the load with an approved PAYE Intermediary. Choosing a PAYE Intermediary greatly reduces the number of things you need to remember when you’re starting out – however, it’s still helpful to be aware of the processes that the PAYE Intermediary are undertaking on your behalf.
The following steps have been created to assist first-time employers who have opted for a PAYE Intermediary such as Thankyou Payroll…
If you have decided to perform your payroll in-house, you can visit our Guide to Payroll for additional guidance.
Registering as an employer.
Before you do anything, your first port of call is to register as an employer with IRD. This step creates a payroll account in myIR that your intermediary can send your pay information to.
Locking in your PAYE Intermediary.
Once you have settled on a PAYE Intermediary which is well suited to your business, you will need to fill out an IR920 form and return this to your selected PAYE Intermediary as part of your onboarding process.
This form grants your chosen PAYE intermediary the authority to engage with IRD on your behalf, substantially diminishing your payroll responsibilities and freeing up your time to get back to doing the things you love.
Gathering employee information.
All employees must fill out an IR330 form to determine their tax code. This code informs your payroll software how much tax they need to deduct from an employee’s pay and whether they need to make student loan repayments.
Then comes KiwiSaver. Did you know that every New Zealand citizen or permanent resident aged 18 to 64 must be enrolled in KiwiSaver? If any of your employees are not already enrolled in Kiwisaver, your job is to make sure they have filled out a KS2 form so you know how much to deduct from their pay. Then, once you have processed their first payment, they will automatically be enrolled – although they can choose to opt out from here if they choose.
With this in mind, it’s important that you keep your employees well informed about Kiwisaver and how it works. You can do this by providing them with a KiwiSaver information sheet to explain their current scheme and their right to choose whichever scheme they wish.
Paying your employees.
Once all of the relevant information is entered into the payroll system, that’s the tricky stuff out of the way.
When you’re ready to run your first pay, the two key things you need to remember are to enter your employees’ timesheets into your payroll system and send your employees’ gross payment to your PAYE Intermediary. The rest is taken care of.
From here, a PAYE Intermediary such as Thankyou Payroll will:
- Make the correct deductions (i.e. PAYE, KiwiSaver contributions, student loan repayments or child support payments) from your employees’ pay and file the information about these deductions with the IRD within two business days of their payday.
- Pay the relevant deductions to the IRD by either the 20th of every month or by the 5th and the 20th of the month, depending on the size of your business.
By undertaking these tasks on your behalf, PAYE Intermediaries not only simplify your payroll process, but they help you to avoid unwanted fines from IRD by ensuring the appropriate information is filed on time, every time.
We’re not ashamed to admit that NZ payroll can be confusing – that’s why we exist. With 10 years of payroll experience under our belt, we’re here to make your life easier so you can focus on the areas of your business that matter most.