How payroll typically works for consultants
A good payroll services for consultants engagement starts with a fast review: business structure, who you pay (employees, directors, contractors), current software, pay cycles, award or agreement coverage, and any urgent deadlines.
From there, work usually falls into three layers:
- Immediate fixes: resolve STP errors, late super, incorrect leave balances, over/underpayments, and mismatches between payroll and your general ledger.
- Process design: standardise onboarding, timesheets, approvals, expense reimbursements, billable cost capture, and pay-run checklists.
- Ongoing payroll: timely pay runs, STP lodgements, super contributions, accruals, off-cycle corrections and year-end finalisation.
Consultants benefit from linking time and payroll to project reporting. When timesheets drive pay and billing, utilisation, margin and write-offs are easier to manage.
Australian rules to keep in view
- PAYG withholding: register before withholding from employees and directors. No-ABN withholding can apply to some contractor payments.
- STP Phase 2: report each pay run through an enabled system (e.g. Xero, MYOB, KeyPay/Employment Hero). Keep pay item mapping compliant.
- Super guarantee: ensure correct super on ordinary time earnings. The rate is generally 11.5% from 1 July 2024; pay via SuperStream by due dates to avoid penalties.
- Fair Work and NES: check award or agreement coverage, ordinary hours, overtime, allowances, leave and public holiday rules relevant to the roles you employ.
- Payroll tax and workers’ compensation: state and territory thresholds and registration tests vary. Watch grouped employer rules and wage definitions.
If you’re also tackling bookkeeping, BAS or tax alongside payroll, see our bookkeeping services, BAS agent services, tax accountant and general payroll services pages.
What to compare before you commit
Scope
Confirm setup, onboarding, award interpretation, pay runs, STP, super, payroll tax, year-end finalisation, and cleanup or catch-up work are covered.
Software fit
Check experience with your tools (Xero or MYOB; KeyPay/Employment Hero; time apps like Deputy or TSheets) and how they integrate to projects and billing.
Turnaround and communication
Ask about cut-offs for timesheets/approvals, urgent off-cycle runs, who signs off, and how exceptions are handled during peak periods.
Commercial fit
Compare fixed-fee vs hourly, reporting cadence, and whether you want compliance-only or advisory that connects payroll to utilisation and margins.
Best next steps
Write down your immediate outcome: clean setup, regular pay runs, STP fixed, super up to date, or payroll connected to time and billing. Shortlist providers who can explain the workflow and show the reports you will receive.
If you’re growing headcount or shifting from contractors to employees, align payroll with your bookkeeping, BAS and tax processes to avoid double handling. Our Consultant Accountant hub and related pages below can help you choose the right pathway.
Frequently asked questions
Can contractors be paid through payroll?
Usually no. Genuine contractors issue invoices and are paid through accounts payable. If a contractor is deemed an employee for tax or super, PAYG withholding, super and STP may apply. Where voluntary withholding or closely held payees are involved, get advice before paying.
Which payroll software works best for consultants?
Xero Payroll or MYOB cover core payroll and STP. KeyPay/Employment Hero add award interpretation, self-service and rosters. Time apps like Deputy, TSheets or native Xero/MYOB timesheets help connect payroll to project billing.
What are the key payroll dates I should know?
STP with each pay run, super generally due quarterly by the 28th after quarter-end, PAYG withholding on your monthly or quarterly Activity Statement, and STP finalisation usually by 14 July (check ATO concessions for your situation).
How should we handle reimbursements and billable costs?
Keep receipts, reimburse employees promptly and code costs to projects so you can on-charge clients correctly. Separate true reimbursements from taxable wages to avoid overstating payroll costs and ensure compliance.