Introduction: Payroll and Super — Non-Negotiable Compliance for SMEs
For Australian small and medium enterprises (SMEs), managing Payroll and Superannuation isn’t just an administrative task — it’s a legal obligation. Accurate payroll processing ensures employees are paid correctly, while superannuation contributions safeguard your team’s financial future. Both functions must meet strict Australian Taxation Office (ATO) compliance standards.
At Professional Bookkeeping Service (PBS), we simplify payroll and super for SMEs, ensuring full compliance while minimising errors, penalties, and administrative headaches.
What is Payroll?
Payroll Definition
Payroll is the process of calculating and distributing wages to employees while withholding the appropriate taxes, superannuation, and deductions.
Key components include:
- Gross salary calculation
- PAYG withholding (Pay-As-You-Go tax)
- Superannuation contributions
- Leave entitlements (annual leave, personal leave, long service leave)
- Allowances and deductions
- Net pay distribution to employees
What is Superannuation?
Superannuation Definition
Superannuation (super) is a mandatory retirement savings system where employers contribute a percentage of an employee’s earnings into a super fund.
As of 2025:
- Superannuation Guarantee (SG) rate: 11%
- Contributions must be made at least quarterly
- Applies to most employees earning $450 or more in a calendar month
Employers must ensure:
- Timely payments into nominated super funds
- Compliance with SG obligations
- Correct reporting via Single Touch Payroll (STP)
Why Payroll and Superannuation Compliance Matters
Legal Obligations
Non-compliance may trigger:
- ATO audits and fines
- Superannuation Guarantee Charge (SGC) penalties
- Reputational risk with employees
Employee Satisfaction
Accurate payroll processing ensures:
- Trust between employer and employees
- Transparent payslips and entitlements
- Timely wage payments
Business Stability
Proper payroll management supports:
- Budget forecasting
- Predictable cash flow
- Avoiding unplanned financial liabilities
Core Functions of Payroll Management
Employee Onboarding
- Collect Tax File Number (TFN) declarations
- Superannuation standard choice forms
- Employee contracts and award classification
Wage Calculation
- Apply correct award rates or enterprise agreements
- Overtime, penalty rates, and bonuses
- Leave accruals and entitlements
PAYG Withholding
- Calculate income tax based on current ATO tax tables
- Report withheld amounts through STP
- Remit withheld tax to ATO on time
Payslip Generation
Issue compliant payslips with all required details:
- Pay period
- Gross/net wages
- Tax withheld
- Superannuation
- Leave balances
Payroll Tax (State-Based)
- Determine if payroll tax applies based on wage thresholds (varies by state)
- Lodge payroll tax returns where applicable
Core Functions of Superannuation Management
Super Calculation
- Apply correct SG rate (currently 11%)
- Include super on ordinary time earnings (OTE)
Super Payment Processing
- Use SuperStream-compliant payment systems
- Ensure timely payments to avoid penalties
Super Reporting
- Report contributions via STP-enabled payroll software
- Maintain audit-ready records
Common Payroll & Superannuation Challenges for SMEs
| Challenge | Impact |
| Incorrect pay rates | Employee disputes, underpayment claims |
| Late super payments | SGC penalties and interest charges |
| PAYG withholding errors | ATO penalties |
| Leave accrual miscalculations | Budget forecasting issues |
| STP reporting mistakes | Compliance breaches |
Payroll Software Solutions for SMEs
Cloud-Based Platforms
At Professional Bookkeeping Service (PBS), we migrate all clients to Employment Hero Payroll — our platform of choice for its reliability, automation, and compliance features.
We only support Xero Payroll temporarily during the initial onboarding period, to minimise change impact as we transition clients. We do not provide ongoing support for any other payroll software.
By focusing exclusively on Employment Hero Payroll, we deliver consistent, efficient, and fully compliant payroll services tailored to Australian SMEs.
Benefits of Payroll Automation
Using Employment Hero Payroll, PBS provides:
- Automatic tax and super calculations
- STP-compliant reporting
- Real-time leave and entitlement tracking
- Reduced manual data entry
- Seamless integration with bookkeeping systems
How Professional Bookkeeping Service (PBS) Simplifies Payroll & Super for Australian SMEs
At PBS, we handle:
- Employee onboarding and data setup
- Award compliance and wage calculations
- PAYG withholding and ATO reporting
- STP lodgement and reconciliation
- Superannuation processing and SuperStream compliance
- Payslip generation and distribution
- Payroll tax calculations (state-specific)
Our team stays updated with legislative changes to ensure full compliance for your business — without the stress.
Frequently Asked Questions
Is Single Touch Payroll mandatory?
Yes — STP is mandatory for all Australian businesses, regardless of employee count. Lodgements must occur with each payroll cycle.
What happens if super is paid late?
Late super payments incur the Superannuation Guarantee Charge (SGC), which includes:
- Unpaid super
- Administration fees
- Interest charges
Can payroll be outsourced completely?
Yes. Professional Bookkeeping Service (PBS) offers full-service payroll management — ensuring compliance, accuracy, and efficiency while removing the administrative burden from business owners.
Get Professional Payroll & Superannuation Support
Professional Bookkeeping Service (PBS) provides full-service Payroll and Superannuation Management for Australian SMEs. Our done-for-you solutions eliminate errors, reduce risk, and keep you compliant with all ATO obligations.
Contact us today for a free consultation.
