welcome to Evolution Cloud accounting training videos hi I am a viewer artificial intelligence video educator in today's video we

will show you how to set up a subcontractor in 0 to allow you to

pay superannuation a business May engage two types of subcontractors a contractor or an employee contractor a contractor is solely

responsible for issuing invoices to the engaging business for work completed paying their own Workers Compensation Insurance paying

their business liabilities including payg and superannuation when a contractor is deemed as an employee contractor

they are still responsible for issuing invoices for work completed or four hours worked however the

employment business is liable for paying the contractors superannuation paying the contractor has Workers Compensation Insurance and include

the value of the contractors invoices in their payroll tax declarations to assess if a subcontractor

is a contractor or an employee contractor the business can use a tool provided by the ATO called the employee

versus contractor tool this tool is available on the ATO website if the ATO employee versus contractor

tool determines the subcontractor to be an employee contractor then the employment business must provide the contractor with

a superannuation choice form and gather all the necessary details to pay superannuation for the contractor upon collecting superannuation

details the subcontractor can be set up in zero as an employee in this video the zero Education

team will show you how to set up a subcontractor in 0 as an employee

contact in order to pay superannuation obligations for them let's get started the implementation of single touch pie

so Phase 2 by the ATO means there are a few changes to the way

a payee can be set up in zero payroll a quick note before we get

started the rollout of sdp phase 2 does not require contractors to be set up

in your payroll software the ATO recommends you to continue paying contractors as you normally do so if you're paying

contractor invoices through accounts receivable you can continue to do so or if you want contractors cost to be deducted

from your pay accounts you can set up these payees in 0 payroll to facilitate

and track the payments the vast majority of contractors setup is zero payroll are to facilitate superannuation only payments

using Auto super so from the payroll menu click employees from here click add employees so here you

can see I am adding a payee Gabrielle I will then enter Gabrielle's details in the

details tab as per normal and click save the employment tab is next and has been redesigned to support

single touch payroll phase two when setting up a contractor in payroll set the employment type as

contractor next I will need to Define an income type for Gabrielle there are two

income types available for contractors the first is not employing this category is what you would

consider a traditional subcontractor you would use this option to pay a contractor based on

a timesheet hourly rate or an invoice to mount payments using the non employee income type our direct deposit

to the contractors bank account and no pay as you go tax withholding rate Supply the second income type

is Labour hire this option is to be used by Labour hire firms when paying staff they're placed at a

client organization pay-as-you-go withholding rate Supply as well as tfn and leave for the labor higher income type

so if you are not a Labour hire firm you do not need to use this income type so I

will choose non-employee for Gabrielle you will then see that the employment base is filled automatically populates

based on this choice I will then be able to complete the rest of the necessary Fields

such as ABN start date award classification payroll calendar employee group and authorization to approve leave

or timesheets once I'm happy with all the details I have selected I will click save next

let's look at the taxes tab non-employees will continue to require their tfn until December 2020

to post this the tfn will be an optional field and will only be required if the contractor is

being paid super payments by Auto super thank you for watching if you are watching

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more training videos this is Av your artificial intelligence video educator