Now Employing? – Prepare for payroll paperwork

There's more to taking on staff than getting additional help and expertise. There's the added workload on the employer, in particular payroll administration.

So just what is involved?

Registering as an Employer
All employers must be registered with the IRD – this can be done online or by completing from IR334.

Keeping Records
Payroll information must be kept for seven years, this includes:

• Employee name and address
• Wages paid to the employee
• Work performed
• PAYE deductions and payment receipts
• Tax code declarations (IR 330)
• Letters from IRD requesting any tax code changes
• Leave details

Deducting PAYE
PAYE must be deducted from wages at applicable tax rates.
Tax rates vary according to the amount of wages paid and the relevant tax code of the individual.

All staff must complete a Tax Code Declaration form (IR 330) - failing to deduct PAYE can result in penalties to the employer.

Filing PAYE returns with the IRD
Information about employees' gross earnings and tax deductions must be provided to the IRD. This is done by filing Employer Deduction Returns (IR345 or IR346) and Employer Monthly Schedules (IR348).

Paying PAYE to the IRD
Payment must be made to the IRD for total taxes and other deductions from employee wages.

Small employers
Where PAYE is less than $100,000 a year, returns must be filed and PAYE paid by the 20th of the following month.

Large employers
Where PAYE is more than $100,000 a year, returns must be filed and PAYE paid twice a month, on the 20th of the month and the 5th of the following month. This means that for the period 1/5/09-15/5/09 the return and payment are due by 20/5/09. For the period 16/5/09-31/5/09 the return and payment are due by 5/6/09.

Deducting from Wages
Unless required by law, do not deduct anything from wages without the written consent of the employee. If wages are overpaid, obtain written consent before deducting the overpayment from the next pay. The law does allow the following deductions to be made:

• PAYE
• Student Loan
• Superannuation fund contributions and relevant taxes
• Child support
• Earner premium and earners account (these are included in the PAYE calculation)
• Kiwi Saver

If you are taking on staff, be mindful of your responsibilities – failing to meet them can mean serious penalties. If you have any doubts or concerns, the IRD and Department of Labour can help you out.