How is a new client like a box of chocolates?

Posted: 15 Sep '23
How is a new client like a box of chocolates?

How is a new client like a box of chocolates?

Taking on new a bookkeeping client is a bit like the Forrest Gump analogy of the box of chocolates. We are really excited to be able to make a difference for another small business, but we are also interested to see what goes on under their bookkeeping bonnet, whether it be good or bad. The most common and upsetting errors we see with a new client are in payroll. Think of these as the Turkish delight chocolates. You know, the ones that are always left in the box until the end. We are talking about those little chocolate gems like the incorrect use of awards, leave accrual miscalculations or the tardiness of super payments.

Payroll is a crucial aspect of running any business. It might not be the most glamorous topic, but it is the heartbeat of every company. When it comes to setting up and calculating payroll for your employees, you just can't afford to cut corners or entrust this task to inexperienced hands. Australian payroll and awards can be especially complicated and getting the basics wrong can quickly lead to miscalculations, legal troubles and, most importantly, unhappy employees. Just consider a couple of recent cases where Australian businesses learnt this lesson the hard way.

Example 1: Company A's Costly Mistake

Company A, a small startup in Sydney, was eager to save on expenses. They decided to task an entry-level employee with no payroll experience to handle their payroll.

The inexperienced employee mistakenly classified some workers as independent contractors instead of employees. This misclassification led to underpayment of taxes and a failure to provide mandatory benefits. The Australian Taxation Office (ATO) caught wind of the error during an audit, and the consequences were dire.

Company A faced penalties for underpayment, backpay for affected employees, interest charges, and legal fees to rectify their payroll mistakes. In the end, their attempt to save a few dollars resulted in a significant financial setback as well as harm to their brand-new corporate reputation.

Example 2: The Retail Nightmare

Company B, a chain of retail stores, chose to rely on an inexperienced bookkeeper to manage their payroll. In a rush to pay employees on time, the bookkeeper made several calculation errors, resulting in inconsistent payments for workers.

Employees grew frustrated and began lodging complaints with the Fair Work Commission. The investigation revealed multiple payroll mistakes, and Company B was slapped with hefty fines for non-compliance and a tarnished reputation that drove away customers and skilled employees.

Example 3: The Restaurant Debacle

Company C, a popular restaurant in Melbourne, also opted for an inexperienced payroll manager. This choice led to inaccurate records and, more importantly, failure to comply with penalty rates, superannuation, and leave entitlements.

Once again, the Fair Work Commission intervened, ordering Company C to pay substantial penalties and compensate affected employees for their underpaid entitlements. The public backlash and media scrutiny also hurt the restaurant and the restauranteur’s image and bottom line. They eventually went into liquidation.

These examples illustrate the perils of entrusting payroll responsibilities to inexperienced individuals. In each case, businesses faced:

Financial Penalties: Companies were slapped with substantial fines, often running into thousands or even millions of dollars.

Legal Consequences: Legal proceedings, including backpay, interest charges, and legal fees, further burdened these businesses.

Reputation Damage: Public perception suffered, leading to a loss of trust from employees, customers, and potential investors.

Employee Discontent: Employees faced financial hardships due to underpayments and discrepancies, resulting in a loss of morale and productivity.

To avoid these pitfalls, it's crucial to recognize the value of payroll expertise. Hire experienced professionals or consider outsourcing payroll services to reliable agencies. Investing in knowledgeable payroll management not only ensures compliance with Australian labour laws but also enhances your business's reputation and employee satisfaction. The perils of using an inexperienced person can have far-reaching consequences that will cost more in the long run. So, don't let inexperience be your downfall; invest in expertise to keep your payroll running smoothly and your business thriving.

Remember, in payroll, as in life, it's always better to be safe than sorry! And it’s always better to eat Caramellos than Turkish Delight. That’s got nothing to do with payroll. It just had to be said.

Stay ‘Appy!

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