Every dollar counts for charity and philanthropic organisations that run under a not-for-profit model. This includes payroll and there is little room for wasted expenditure in this department.
This article will outline ways non-profit organisations can streamline and improve payroll operations to reduce spending, pay less tax and have more operational capital to continue their charity work.
Outsource Payroll Services to a Professional Organisation
i3Group services a number of not-for-profit clients, and thus has an intimate knowledge of how optimal payroll can be delivered while still upholding the salary sacrificing and typical benefits available to these employees. Trying to run payroll in-house with these additional considerations followed can be expensive and there are risks of human error that can have major impacts on your bottom line. Outsourcing your payroll solutions to a dedicated third party can reduce these expenses and ensure that you are always compliant.
Outsourcing payroll services to a professional consultant also means that you are not extending office space, salary benefits and unnecessary concessions to an employee. The payroll consultant works collaboratively yet separately from the organisation, with that distinction allocating more funds back into the business and other areas more deserving or that funding.
Integrated Payroll Software
i3Group is expertly trained in a number of payroll software providers, especially those that are commonplace in a not-for-profit environment. This accessibility means that record keeping is not only automated but integrated with other programs used by payroll teams and human resources – saving time and manpower and eliminating the need for double-handling.
With most employees taking advantage of not-for-profit employment benefits, integrated payroll software are invaluable to delivering an on-time and accurate payroll. In fact, our professional payroll consultants have seen this seamless model actually reduce the need for a larger headcount which can “trim the fat” off a finance team that is larger than it needs to be.
Most commercial record-keeping software packages will include a range of other benefits as well, including showing all incoming and outgoing money so your organisation can help manage its cash flow – which is vital for any business. If your not-for-profit business has a number of funding bodies or is required to report contributions and outgoing, then a smart software solution is absolutely mandatory and will save you the over-time when it comes to reporting time as all information will be clear to see, without the scramble from your internal team.
Apply for Tax Concessions
The Australian Taxation Office (ATO) and state and territory governments offer several tax concessions to charities. If you wish to apply for charity tax concessions from the ATO, your organisation must be registered with the Australian Charities and Not-for-profits Commission (ACNC), this may seem like a basic consideration but many organisations will not keep up to date with legislative changes and miss opportunities to apply for further tax concessions.
Some of the Commonwealth Government concessions include income tax exemptions, franking credits, GST concessions and fringe benefits tax rebates as the standard. However, if we look at the many health-facing not-for-profit businesses that have been impacted by the pandemic, the government has been agile in its approach to providing finance ease to relevant industries. i3Group prides itself on keeping a finger on the pulse when it comes to tax and employee exemptions, so understand what is available in your region and sect so see what savings you can afford this tax period.
In Victoria, you can also apply for a payroll tax exemption for all of the wages that you pay as long as you meet several criteria. This includes any organisations that are primarily devoted to charitable, benevolent, philanthropic, or patriotic purposes. It might surprise you to learn how your organisation identifies and what tangible exemptions may be available to you.
Hire More Independent Contractors Where Possible
There are three different kinds of employees in non-profit organisations and charities, paid employees, independent contractors and unpaid volunteers. Volunteers are obviously not subject to tax, so the more people you can get donating their time, the less you will need to pay in wages and payroll management.
Outside of volunteers, there are benefits in hiring contractors over full-time, part-time and casual employees. They are only paid for the task they have been hired for, the time they take and the results that they achieve. While payments to contractors are still subject to a payroll tax, your charity or non-profit organisation will not have to pay as much because you are only paying them for specific tasks, not on an ongoing basis. This also allows you to assess the value that these contractors are adding to the business, and you can seek new, less or additional contractors if and when you need them – rather than hiring an employee only to find that their salary is worth more to the business than their actual contribution.
Future-Proofing The Organisation
Every not-for-profit has a board they must report to, and those stakeholders want to see that the allocated funding has been expertly distributed. Poor processes and laziness on the part of a management team can create issues in the future, and maybe even some circumstances that are hard to explain to the board.
Resist paying any staff member in a way that is not in line with their award, as this will actually cost you in the long run if there is a fine that is handed down by the ATO as a result. Typically these slips are a result of an over-burdened team, so it might be time to look into outsourced payroll solutions if your team is struggling to uphold legal obligations.
If you would like to learn about how i3Group can work with your not-for-profit business, contact our payroll professionals today!