Payroll for Small Business: Obligations & Setup
Payroll for small business means paying employees the correct wages and super on time, issuing payslips and reporting to the ATO. From 1 July 2026, payday super requires super to reach each employee's fund within 7 business days of payday, and the super guarantee is 12% of ordinary time earnings. This guide is for small employers and the workers they pay, and it covers rates, steps, records, tax and what to do when something goes wrong.
- Payroll for small business starts with the right award or national minimum wage, which is $26.44 per hour from the first full pay period on or after 1 July 2026.
- Super is 12% of ordinary time earnings for 2026-27 and, under payday super, must reach the employee's fund within 7 business days of payday.
- Payslips are due within 1 working day of payday, and time and wage records must be kept for 7 years.
- NSW payroll tax for 2026-27 is 5.45% of NSW taxable wages above the $1,200,000 annual threshold.
What is payroll for small business?
Payroll for small business is the full cycle of working out pay, deducting tax, paying super, reporting to the ATO and keeping records for a business with a modest team. It runs every pay period and ties together employment, tax and super law.
Many owners run it themselves, while others use software, a bookkeeper or managed payroll. The legal duties are the same whichever way you do it.
| Term | Meaning | Why it matters |
|---|---|---|
| Payroll employment | Putting a worker on your own payroll as an employee, so you pay wages, super and workers insurance. | It makes you responsible for entitlements, tax withholding and records. |
| Managed payroll | A third party runs your pay runs, payslips, super and reporting for a fee. | It saves time, but you remain responsible for correct pay. |
| Payroll records | Time, wage, leave and super records for each employee. | They must be kept for 7 years and may be checked by the Fair Work Ombudsman. |
| Single Touch Payroll (STP) | Reporting of payroll information to the ATO on or before each payday. | It replaces separate annual reporting for most employers. |
| Ordinary time earnings (OTE) | Earnings for ordinary hours, which are the base for super. | Overtime is generally outside OTE, so check how your payroll treats it. |
| Payday super | The rule that super is paid with wages and reaches the fund within 7 business days of payday. | Late super is easier to spot and costs more to fix. |
Who payroll for small business applies to
Most private-sector employers are in the national system. NSW state public sector staff and some local government employees are in the NSW state system, so check before relying on a national rule.
| Worker type | What payroll must do |
|---|---|
| Full-time employee | Pay at least the award or national rate for 38 ordinary hours a week, plus overtime and penalties the award requires, with super and leave accruals. |
| Part-time employee | Pay the same hourly rate as a full-timer in the role, with leave pro rata and hours as agreed in writing. |
| Casual employee | Pay the base rate plus the casual loading, usually 25%, and at least $33.05 per hour if no award applies from 1 July 2026. |
| Labour hire worker | Employed and paid by the labour hire provider, not by the host business. |
| Genuine contractor | Not on payroll, but an ABN does not decide whether someone is a contractor. Test the real relationship with the Fair Work Ombudsman and ATO tools. |
Payroll for small business rates and thresholds for 2026-27
These are the current figures, and each one applies from the date shown. Check them again every 1 July.
| Item | Figure | Applies from |
|---|---|---|
| National minimum wage, hourly | $26.44 | First full pay period starting on or after 1 July 2026 |
| National minimum wage, 38-hour week | $1,004.90 | First full pay period starting on or after 1 July 2026 |
| Casual minimum, hourly (includes 25% loading) | $33.05 | First full pay period starting on or after 1 July 2026 |
| Modern award minimum rates | Up 4.75% | First full pay period starting on or after 1 July 2026 |
| Super guarantee | 12% of ordinary time earnings | 2026-27 |
| Maximum super contribution base | $270,830 per year, so the maximum super guarantee amount is $32,499.60 | 2026-27 |
| Concessional super contributions cap | $32,500, including salary-sacrificed super and the employer's contributions | 2026-27 |
| NSW payroll tax | 5.45% of NSW taxable wages above $1,200,000 a year | 2026-27 |
| Payslips | Within 1 working day of payday | Ongoing |
| Time and wage records | Keep for 7 years | Ongoing |
How to run payroll for small business step by step
Run the same checks every pay period, and a Monday-morning payroll cut-off becomes routine rather than stressful. Public holidays and long weekends are when mistakes creep in.
- Confirm each employee's award or agreement, classification and employment type, and record them in your payroll system.
- Look up the current rate in the Fair Work Ombudsman pay guide, which is free, and update rates from 1 July each year.
- Collect approved timesheets for the period, including start and finish times and breaks.
- Calculate gross pay: ordinary hours at the rate, plus overtime, penalties, loadings and allowances.
- Withhold tax, add 12% super on ordinary time earnings and prepare the payslips.
- Pay wages and super together so super reaches the fund within 7 business days of payday.
- Report to the ATO through Single Touch Payroll on or before payday, then file the records.
| Worked example | How it works |
|---|---|
| Full-time worker, no award | 38 ordinary hours at $26.44 per hour gives $1,004.90 for the week, before tax. Super of 12% is added on top and is not deducted from the wage. |
| Casual worker, no award | Each hour is paid at $33.05, which includes the 25% loading. Super is still calculated on ordinary time earnings. |
| High earner | Super is capped at the maximum contribution base of $270,830 a year, so the most the employer must pay is $32,499.60. |
Employer obligations and a payroll checklist
Use this checklist each pay period and review it every 1 July. It is also the list an auditor would ask about.
- Pay at least the award, agreement or national rate for every hour worked, including inductions and pre-start meetings.
- Issue each payslip within 1 working day of payday, showing rate, hours, loadings, super and deductions.
- Keep payroll records, including time and wage records, for 7 years.
- Report payroll information to the ATO through Single Touch Payroll on or before each payday.
- Pay super with wages so it reaches the employee's fund within 7 business days of payday.
- Register for NSW payroll tax if NSW taxable wages go above $1,200,000 a year, and lodge returns with Revenue NSW.
- Take out workers insurance with icare unless you pay $7,500 or less in annual wages, employ no apprentice or trainee and are not in a group for premium purposes.
- Give new casuals the Casual Employment Information Statement, and respond properly when a casual asks to convert.
Super guarantee in small business payroll
Super is the most common source of late payments. Our guide to the super guarantee covers the rules in more detail.
- Pay 12% of ordinary time earnings for 2026-27, in addition to wages and not out of them.
- Make sure payments reach each employee's fund within 7 business days of payday under payday super.
- Stop calculating the guarantee on earnings above the maximum contribution base of $270,830 a year.
- Watch the $32,500 concessional cap for employees who also salary sacrifice, since it includes your contributions.
Single Touch Payroll for small business
Single Touch Payroll turns each pay run into an ATO report. Read our guide to Single Touch Payroll for set-up and corrections.
- Report wages, tax withheld and super information on or before each payday.
- Check your software connects to the ATO and that employee details match their records.
- Correct mistakes in the next report, and keep a note of what changed and why.
- Keep payroll records behind each report in case the ATO or the Fair Work Ombudsman asks.
Payroll tax NSW for small business
Most small employers pay no payroll tax, but growing businesses and groups can cross the line without noticing. See our guide to payroll tax in NSW for the details.
- NSW payroll tax for 2026-27 is 5.45% of NSW taxable wages above the $1,200,000 annual threshold.
- Other states differ: Victoria has a $1,000,000 threshold at 4.85%, Queensland $1,300,000 at 4.75%, and Western Australia $1,000,000 at 5.5%.
- Check whether wages paid through related businesses or labour hire arrangements count towards your total.
- Register with Revenue NSW once you expect to pass the threshold, and keep wage records to support returns.
Payslips in small business payroll
A clear payslip is the first thing a worker checks and the first thing a dispute turns on. Our payslip explained guide breaks down each line.
- Give payslips within 1 working day of payday, on paper or electronically.
- Show gross pay, tax, super, hours, rates and any allowances or deductions.
- Keep a copy of every payslip with the payroll records for 7 years.
- Explain year-to-date totals and leave balances if a worker asks.
Backpay for small business payroll errors
When an underpayment is found, fix it fast and fix it fully. Our backpay guide explains how to work out what is owed.
- Check the pay guide for the period in question, including the rate that applied before and after 1 July.
- Calculate the shortfall for each pay period, including penalties, overtime and super on the extra amount.
- Pay the amount owed in writing, explaining how it was worked out.
- Update your payroll system so the error does not repeat, and keep records of the correction.
Common mistakes to avoid
- Paying the national minimum wage when an award applies, which can leave a worker well below the lawful rate.
- Skipping the 1 July update, so every shift for months is paid at the old rate.
- Paying super late or in a quarterly batch, when payday super expects it with wages.
- Treating allowances or super as part of the hourly rate instead of paying them on top.
- Calling a worker a contractor because they have an ABN, without testing the real working relationship.
- Throwing out timesheets and payslips early, leaving no proof in a dispute within the 7 years you must keep them.
Payroll for small business FAQ
What is payroll for small business?
It is the process of paying employees correctly and on time, including wages, tax, super, payslips, ATO reporting and records. Small employers carry the same legal duties as large ones, so a clear checklist for each pay run matters.
What are payroll records?
Payroll records are the time, wage, leave and super details for each employee. Employers must keep time and wage records for 7 years and give payslips within 1 working day of payday.
What is managed payroll?
Managed payroll is where a provider runs your pay runs, payslips, super and reporting for a fee. You are still responsible for paying the right rate, so check the provider's work against the pay guide.
What does payroll employment mean?
It means employing a person directly on your payroll, so you pay wages, super and workers insurance and you hold the employment records. A labour hire provider does this for the workers it places with host sites.
When do I pay payroll tax in NSW?
You pay it when your NSW taxable wages exceed the $1,200,000 annual threshold, at 5.45% of the amount above it for 2026-27. Register with Revenue NSW once you expect to pass the threshold.
Where can I check what I should pay?
Use the free Fair Work Ombudsman pay guide for the relevant award and classification, or call the Fair Work Infoline on 13 13 94. If no award applies, the national minimum wage and casual minimum are the floor.
Next step: tighten your payroll for small business
Check each worker's award and classification, update rates from 1 July, and confirm super reaches funds within 7 business days of payday. At TQN Personnel, we place and pay labour hire workers across Sydney and can help host employers with staffing. This is general information, not legal, tax or financial advice, so check the Fair Work Ombudsman, the ATO or an employment lawyer for your situation.