How to set up your business to employee staff in Australia
Step 1. Register for Pay As You Go withholding
You must register for pay as you go (PAYG) withholding before you’re first required to make a payment that is subject to withholding. This is required even if you do not withhold any amount from a payment made.
You can register your business for an Australian business number (ABN), GST, PAYG and a business name, all at the same time on the Australian Business Register.
If you need to withhold tax but don’t need an ABN, you must register for a PAYG withholding account.
How to register for PAYG withholding
If you have an ABN
If your business has an active ABN, you can register or cancel your PAYG withholding business account:
- online through ATO’s Online services for businessExternal Link
- through your registered tax agent or BAS agent
- using your Standard Business Reporting (SBR) compatible software
- by phoning the ATO business line if you’re an authorised business contact
Step 2. Employee to complete Tax File Number Declaration
Employee must omplete a Tax file number declaration so the employer can work out how much tax to withhold from wage payments.
How to get this form
Options are:
- complete a pre-filled form through ATO online services linked to myGovExternal Link
- in ATO’s online services, select Menu, then select Employment and then select New employment
- download the Tax file number declaration (NAT 3092, PDF, 402KB)This link will download a file and either
- fill in the form on screen
- print the form in A4 size and fill it in by hand
- complete an electronic TFN declaration form if your payer currently lodges their TFN declaration reports electronically.
- get a paper copy of the Tax file number declaration (NAT 3092), including both the instructions and form, by either ordering online or phoning 1300 720 092, 24 hours a day, 7 days a week. If you do this
- take note of the name and number Tax file number declaration (NAT 3092) before ordering the product
- only order what you need as this form is reviewed annually.
Completing your Tax file number declaration form online
If you are completing the pre-filled form in our online services, you’ll need your:
- employers Australian business number (ABN)
- employment type (for example, full time, part-time, casual)
- employers default super fund details
- name
- unique superannuation identifier (USI) of your nominated super fund
- ABN.
You’ll need to print out the completed form summary and return this to your payer so they can work out how much tax to withhold from payments they make to you.
Filling in your form on screen
If you are filling in this form on screen:
- download a copy of this form to your computer
- when complete, print a copy in A4 size
- sign and date the declaration
- give your completed form to your payer.
Filling in your form by hand
If you are filling in this form by hand:
- print clearly in BLOCK LETTERS using a black or dark blue pen
- place X in all applicable boxes
- do not use correction fluid or covering stickers
- sign and date the declaration
- give your completed form in A4 size to your payer.
Step 3. Report wages to ATO through Single Touch Payroll
Single Touch Payroll
Single Touch Payroll (STP), is an Australian Government initiative to reduce employers’ reporting burdens to government agencies.
With STP, you report employees’ payroll information to us each time you pay them through STP-enabled software. Payroll information includes:
- salaries and wages
- pay as you go (PAYG) withholding
- superannuation.
STP started on 1 July 2018 for employers with 20 or more employees and 1 July 2019 for employers with 19 or fewer employees and is a mandatory obligation.
We have provided several concessions depending on business, industry, or employer types. Most of these end on 1 July 2021. If you have a current concession you will need to be reporting each pay day through STP by this date.
If you haven’t started reporting through STP, you need to start reporting as soon as possible as penalties may apply.
Next steps:
- Start reporting now
- Concessional reporting options for eligible employers who have exceptional circumstances.
Step 4. Software solutions for Single Touch Payroll
There is a wide range of Single Touch Payroll (STP) software solutions available for employers.
To report through STP you need to choose a solution that’s right for you and your business based on your own circumstances.
Micro employers
Micro employers with four or fewer employees can find no-cost and low-cost solutions for STPExternal Link. These solutions may include mobile apps, simple reporting solutions and portals.
To be eligible for this list, the solutions must:
- be affordable (costing less than $10 per month)
- take only minutes to complete each pay period
- not require the employer to maintain the software.
Other employers
View the full STP product registerExternal Link to see the complete range of products offering varying degrees of functionality, support, and pricing models.
Step 5. Purchase WorkCover Insurance
WorkCover’s Accident Insurance Policy covers you and your workers if a work-related injury or illness happens.
In Queensland, if you employ workers you must insure them against work-related injury or illness. Unless you’re a self-insurer, you need to take out a policy with WorkCover.
What’s covered?
This policy covers you if one of your workers experiences a work-related injury or illness and needs to claim workers’ compensation. This includes both no-fault statutory claims and damages (at-fault) claims. You can read more about these types of claim costs in the sections below.
Who is covered?
Your policy covers any workers you employ as defined in the Workers’ Compensation and Rehabilitation Act 2003. It covers workers employed by your business only. Any person you might hire to provide a service from another business is covered by their own employer.
If you’re a sole trader or a director or partner of your own business, or you’re employed by a Trust where you’re a trustee, you’re not considered a worker so you’re not covered by your accident insurance policy. You can take out Workplace Personal Injury Insurance to cover you if you’d like to, but it’s not compulsory.
Step 6. Provide employees Superannuation choice of fund
Superannuation standard choice form
This form is for employers to advise employees of the employer’s nominated fund, and for employees to tell an employer of their choice of fund (NAT 13080).
The standard choice form is for use by both employers and employees.
Employers
Use the form to offer eligible employees their choice of superannuation (super) fund. You must fill in the details of your nominated super fund, also known as your default fund, before giving the form to an employee.
Employees
Use the form to advise an employer of your choice of super fund. You need to provide the information requested so your employer can make contributions to your nominated super fund.
How to complete this form
Employees can access and complete pre-filled forms through either:
- > ATO online services via myGov
- – access the forms through the Employment menu
- – the employer’s Australian business number (ABN) and their default fund’s unique – superannuation identifier (USI) will be needed to complete this form
- > their employer’s employee commencement-enabled payroll software, if available.
Step 7. Pay Superannuation Guarantee Contribution if wages more than $450 per month
Super for employers
Superannuation is money employers must pay eligible workers to provide for their retirement.
Super guarantee (SG) is the minimum amount you must pay to avoid the super guarantee charge. Super guarantee is currently (2021/22) 10% of an employee’s ordinary time earnings.
In this section
- Work out if you have to pay super
- Setting up super for your business
- Paying super contributions
- Missed and late super guarantee payments
- Super obligations for employers checklist
Watch the video for more details about your super obligations:
Small Business Superannuation Clearing House provides easy payment option
Small Business Superannuation Clearing House
Eligible employers can pay super for their employees through the Small Business Superannuation Clearing House (‘the clearing house’).
On this page
- Eligibility
- About the clearing house
- Accessing the clearing house
- Using the clearing house for the first time
- Making payments
- Help and support
Eligibility
You’re eligible to use the clearing house service if your business has either:
- 19 or fewer employees
- annual aggregated turnover of less than $10 million.
You must meet one of these eligibility criteria each time you use the clearing house. If you stop being eligible – for example, because you hire more than 19 employees – you will need to make other arrangements to pay employee super.
About the clearing house
The clearing house is a free online service provided by the Australian Government through the Australian Taxation Office.
You can use the clearing house to pay super for all your employees through a single payment. The clearing house will then distribute the money to each employee’s super fund according to your instructions.
With the clearing house, you can:
- nominate a regular amount for each employee or change the amount when you make a payment
- meet your super guarantee (SG) obligations when your payment and instructions are accepted by the clearing house by following the clearing house terms and conditions
- pay online to meet SuperStream requirements
- see records of your past super contributions.
Accessing the clearing house
If you have an ABN
You can access the clearing house through the ATO Business Portal:
- select Manage employees in the left menu
- select Small Business Superannuation Clearing House.
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