I’m hiring! What do I need to know?

Employing people often indicates you are growing your team - how exciting! There are a few steps that often get missed. Here’s the important stuff to know

1. Register as an employer with the IRD

You can do this yourself through your MyIR account (I want to > More > Register for new tax type > EMP, employer), or your tax agent/accountant can do this for you we can do this for you (for Prosper clients only).

You also have to register as an employer if you hire contractors and need to pay withholding tax on their behalf.

2. Employment Contracts

You can get HR advice on this or use a lawyer, but you can also do the contract yourself using the NZ governments Employment Contract Builder - this helps you to create a basic employment agreement, ensuring you meet all current minimum requirements in your employment contract. Use the link below to have a go yourself!

It’s super important to get your team members to review and sign their employment contracts before they start working for you otherwise some clauses can be null and void. We recommend you get specific HR advice around this.

3. Tax Forms

Part of the information you gather includes (shock horror!) a couple of tax forms!

When getting your new employee to sign their contract, you can also get them to complete the following forms

• Tax Declaration Form (IR330) - you can download this here or simply Google the tax form number

• Your employee must complete a KS2 (opt in) or KS10 (opt out) form. If they have been in kiwisaver before, then they must do the KS2 form. Again, google these form names and you can download them

If they don’t want to contribute for the time being to their kiwisaver, they can apply to go on a savings holiday. Once the submission has been approved, they can pause their kiwisaver contributions. You can find out more here.

Retain the completed documentation on file - you don’t need to send these to the IRD.

4. Choose a Payroll System

It sounds simple, but there are so many options out there! Having a good payroll system is important to

• Ensure your employees are paid and taxed correctly

• Ensure their annual leave, sick leave and any other leave entitlements are correctly managed (not every system does a great job with annual leave if your team work varying hours!)

• Security of pay information and getting it filed with the Inland Revenue

• Payday Filing and your obligations as an employer

Payday filing was introduced in April 2019 and means every time you process a pay run, you need to submit all of the pay information and your employees up to date details to the IRD.

 Payroll systems make this super easy so it isn’t as scary as it sounds! You must pay your PAYE and employment taxes (which are deducted from your employees pay) to the IRD by the 20th of the month following the pay runs. Some payroll systems (where they act as a payroll intermediary) will do the payments for you, and some require you to make the payment manually each month.

Check out our Payroll System Options post for more on some options.

Disclaimer: this is general information only. Please reach out to Prosper Business for specific advice to your situation.