How outsourced payroll usually works
A practical outsourced payroll process starts with a short scoping review of your headcount, awards/EBAs, pay cycles, software, current bottlenecks and deadlines. From there the work splits into three parts: setup, steady‑state pay runs, and reporting/compliance.
- Setup and cleanup: confirm software (Xero, MYOB or QuickBooks), import employees, map pay items, align awards/EBAs, migrate YTD balances and fix STP errors if needed.
- Steady‑state processing: prepare timesheets, calculate ordinary time, overtime and allowances, process leave, lodge STP, send payslips and reconcile payroll clearing accounts.
- Reporting and compliance: pay super on time, handle terminations and parental leave, manage payroll tax where applicable, and finalise year‑end statements.
Australian rules to keep in view
- PAYG withholding applies once you pay employees or directors. Make sure you are registered before the first pay run.
- Single Touch Payroll (STP Phase 2) is mandatory and reported from your payroll software each pay event.
- Superannuation guarantee must be paid by the quarterly due dates and aligned with stapled super fund rules.
- Awards and EBAs drive minimum rates, overtime, penalties, allowances and leave accruals. Get these right from day one.
- Payroll tax may apply once you pass state thresholds, including grouped employer rules. Check your state revenue office.
Need a deeper dive first? Visit the Payroll Services hub or the Help Centre for step‑by‑step guides.
What to compare before you commit
Scope
Confirm the exact inclusions: onboarding, pay runs, STP lodgement, super processing, payroll tax, award interpretation, end‑of‑year finalisation and reporting.
Software fit
Check capability in your stack (Xero, MYOB, QuickBooks Online) and whether they will document workflows and controls, not just “use the software”.
Turnaround and communication
Ask for clear SLAs on timesheet cut‑offs, approvals, urgent pay adjustments and escalation during public holidays and EOFY.
Commercial fit
Compare per‑employee or per‑pay‑run pricing vs fixed fees, reporting frequency, named contacts and whether the service is compliance‑only or includes advice.
Services covered under outsourced payroll
- Employee onboarding, TFN/ABN checks, super stapling and induction packs.
- Award/EBA setup, pay item mapping, leave categories and accrual rules.
- Weekly, fortnightly or monthly pay runs with approvals and audit trail.
- STP Phase 2 event lodgements and EOFY finalisation in your software.
- Superannuation processing via clearing house and contribution reconciliation.
- Termination calculations, redundancy, parental leave and back‑pay adjustments.
- Payroll tax registrations, monthly returns and annual reconciliations where required.
- Management reports: labour cost by job, location or cost centre; leave liability; variance analysis.
Explore industry‑specific pages: Hospitality, Construction, Healthcare, Retail, NDIS, Professional Services.
Software we support
We work with leading Australian payroll platforms and set them up to match your awards, costing and reporting needs.
- Xero Payroll: timesheets, award templates, STP Phase 2, super clearing, Projects integration.
- MYOB: AccountRight/Business payroll, awards, STP Phase 2, super and reporting.
- QuickBooks Online: pay categories, STP Phase 2, super and pay run approvals.
When to outsource vs keep in‑house
- Outsource when headcount grows, award complexity rises, multiple states are involved, or you face frequent onboarding and offboarding.
- Keep in‑house when volumes are small and simple and you already have robust controls and backup operators trained on the process.
- Hybrid works well where a manager approves timesheets and changes, and an external specialist processes and lodges.
How to start: a simple 5‑step handover
- Scope: confirm headcount, awards/EBAs, locations, pay cycle, allowances and software.
- Access: share payroll file access, STP credentials and super clearing house details.
- Data: provide YTD figures, employee files, leave balances and active pay items.
- Parallel run: shadow the first pay to validate calculations, files and approvals.
- Go live: switch processing, set SLAs, report monthly and review after 30 days.
If you are switching providers, we’ll coordinate timing around pay dates and super deadlines to avoid gaps.
Best next steps
Write down the outcome you want: fewer errors, faster turnaround, cleaner compliance or better reporting. Shortlist providers against that outcome, not just job titles.
If you are still deciding, compare options via the Payroll Services hub, or explore Bookkeeping, BAS and Tax if your needs are broader than payroll.
Frequently asked questions
What does outsourced payroll usually involve?
It combines setup and cleanup, ongoing pay runs, STP Phase 2 lodgements, PAYG and super, award interpretation, payroll tax where applicable, and EOFY finalisation. Reporting can include cost centres, projects and leave liabilities.
How do I know if this service suits my business?
It’s a match when you need reliable, compliant pays without hiring a full payroll team. Triggers include multi‑site operations, complex awards, fast hiring, or recurring STP/super issues.
What should I compare before choosing a provider?
Scope, software expertise, SLAs, award/EBAs capability, data security, named contacts, and pricing model. Ask for a sample runbook and a parallel pay run.
Is this the same as an Employer of Record (EOR)?
No. Outsourced payroll processes your payroll within your entity. An EOR becomes the legal employer. In Australia most SMEs need payroll processing, not an EOR.
What should I read next?
Go to the New employee payroll page or your industry page like Hospitality or Construction. Or use the form below for tailored help.