Published Monday 29 June 2026

Table of contents

• What is online payroll?
• How does online payroll work?
• Understanding your payroll obligations
• Preparing for Payday Super
• Is online payroll secure and compliant?
• Benefits of switching to online payroll
• Outsourcing vs in-house payroll
• Essential features for online payroll software
• Choosing the right software
• How much does online payroll cost?
• Getting started with online payroll
• Simplify your payroll
• FAQs on online payroll

Key takeaways

• Online payroll software automates tax calculations, superannuation, and Single Touch Payroll reporting, reducing the risk of compliance errors that can result in fines of up to A$495,000 per contravention for companies
• Australian employers must meet obligations under the National Employment Standards, PAYG withholding, modern awards, and the super guarantee rate of 12%
• Payday Super takes effect on 1 July 2026, requiring employers to pay super at the same time as wages instead of quarterly
• Evaluate total costs carefully before choosing a provider, as monthly subscriptions typically range from A$10 to A$50, but hidden fees for payslips, extra users, or premium features can add up quickly

What is online payroll?

Online payroll is cloud-based software that calculates wages, withholds taxes, and manages superannuation automatically. It pays your employees accurately and on time while giving you the flexibility to run payroll from anywhere.

Unlike desktop payroll programs, online payroll stores your data securely in the cloud. This means you can process pay runs, generate reports, and lodge Single Touch Payroll (STP) submissions from any device with an internet connection.

How does online payroll work?

Online payroll connects your accounting software to your bank for seamless payment processing. Your software creates encrypted payment files, and your bank processes them automatically.

Here's how the process works:

1. Generate payment file: Your payroll software creates a secure file with employee payment details
2. Upload to bank: Log into online banking and upload the payment file
3. Confirm payments: Review and approve the batch payment
4. Automatic processing: Payments are distributed to employee accounts

You can control the whole operation from within your accounting software, and you'll only need to log into your bank account to approve a single batch payment.

Understanding your payroll obligations

Every Australian employer has legal obligations when paying staff. Understanding these requirements helps you avoid penalties and keep your business compliant.

National Employment Standards

The National Employment Standards (NES) set out 11 minimum entitlements for all employees covered by the national workplace relations system. These include maximum weekly hours, requests for flexible working arrangements, parental leave, annual leave, personal and carer's leave, community service leave, long service leave, public holidays, notice of termination and redundancy pay, the Fair Work Information Statement, and the Casual Employment Information Statement.

Your payroll software should track these entitlements automatically so you're meeting your obligations with every pay run.

PAYG withholding

As an employer, you must withhold Pay As You Go (PAYG) tax from your employees' wages and send it to the Australian Taxation Office (ATO). Online payroll software calculates the correct withholding amount based on each employee's tax file number declaration and current ATO tax tables.

Modern awards and agreements

Most employees in Australia are covered by a modern award that sets minimum pay rates, overtime, penalty rates, and allowances for their industry or occupation. Your payroll system needs to apply the correct award rates, including any annual increases from Fair Work Commission decisions.

Enterprise agreements may replace or sit alongside awards for some employees. Check which instrument applies to each of your staff members.

Superannuation guarantee

You must pay super for eligible employees at the current rate of 12% of their ordinary time earnings. Super payments are currently due quarterly, within 28 days after the end of each quarter, but this changes from 1 July 2026 under the Payday Super reforms.

Record keeping

The Fair Work Act requires you to keep employee records for 7 years. These records must include pay slips, hours worked, leave balances, and super contributions. Online payroll software stores these records automatically in the cloud, making it straightforward to retrieve them if needed.

Preparing for Payday Super

Payday Super is a significant change to how Australian employers pay superannuation. From 1 July 2026, you'll need to pay super at the same time as your employees' wages, rather than quarterly.

What's changing

Currently, super contributions are due quarterly, with payment deadlines 28 days after the end of each quarter. Under Payday Super, you'll need to pay super within 7 days of each pay run. This means if you pay staff fortnightly, you'll make super payments fortnightly too.

How to prepare

Start preparing now to avoid disruption when Payday Super takes effect. Here are the steps to get ready:

• Review your current super payment processes and identify any manual steps
• Check that your payroll software supports Payday Super compliance
• Update your cash flow forecasts to account for more frequent super payments
• Talk to your accountant or bookkeeper about the transition
• Make sure your employee super fund details are up to date

Online payroll software that's built for Australian compliance will update automatically to handle the new Payday Super requirements, so choosing the right platform now saves you time later.

Is online payroll secure and compliant?

Online payroll software uses bank-level encryption and secure cloud infrastructure, often aligning with the ASD's Essential Eight strategies, to protect your business and employee data. Reputable providers also automate compliance with Australian regulations, including Single Touch Payroll (STP) reporting, which is a mandatory obligation for all employers.

Online payroll software includes several security measures to protect your data:

• Data encryption: protects sensitive information with bank-grade security protocols
• Access controls: set user permissions to limit who can view or edit payroll data
• Automatic backups: store your records securely in the cloud with regular backups
• Secure payment files: generate encrypted files for bank transfers

Reputable providers also help you meet Australian regulatory requirements. Compliance features include:

• Single Touch Payroll (STP): report payroll information to the ATO automatically with each pay run
• Automatic tax updates: stay current with the latest tax rates and superannuation requirements
• Fair Work compliance: track leave entitlements and award conditions accurately
• Audit trails: maintain detailed records for reporting and review

Using compliant software reduces the risk of calculation errors that can lead to penalties of up to A$495,000 per contravention for companies.

Benefits of switching to online payroll

Switching to online payroll means less time on admin and more confidence that your staff are paid correctly. Here are the key benefits:

• Save time: automate repetitive tasks and reduce hours spent on manual data entry
• Improve accuracy: minimise calculation errors that can result in Fair Work Act fines of up to A$99,000 per contravention for individuals and A$495,000 for companies
• Stay compliant: keep up with the latest tax rates and regulations automatically
• Empower employees: give your team self-service access to payslips and leave information
• Gain insights: view real-time payroll costs to make smarter business decisions

Payroll accuracy matters more than many businesses realise. The 2025 Australian Payroll Industry Survey found that poor or incomplete payroll inputs caused errors for nearly a third of organisations surveyed. Online payroll software helps prevent these errors through automated calculations and validation checks.

Outsourcing vs in-house payroll

Deciding whether to manage payroll yourself or hand it to a specialist depends on your business size, complexity, and budget. Both approaches have advantages.

When in-house payroll makes sense

Managing payroll internally with online software works well if you have a small team with straightforward pay arrangements. You'll keep full control over the process and have direct access to your payroll data for reporting and decision-making.

In-house payroll is also more cost-effective for many small businesses. Monthly software subscriptions are typically far cheaper than ongoing outsourcing fees, and you can process pay runs on your own schedule.

When outsourcing makes sense

Consider outsourcing payroll if your business has complex award structures, multiple employee types across different states, or if you simply don't have the time to manage it yourself. A managed payroll provider handles calculations, compliance, and lodgements on your behalf.

Outsourcing can also help if you're growing quickly and need to scale your payroll without hiring dedicated staff. The trade-off is less direct control and higher ongoing costs.

Essential features for online payroll software

Certain features are essential for running payroll smoothly. When evaluating software options, make sure your chosen software includes:

• Automated calculations: handle wages, taxes, super, and leave entitlements without manual input
• Single Touch Payroll (STP) compliance: report payroll information to the ATO with each pay run
• Employee self-service: let employees view payslips, payment summaries, and update their details
• Bank integration: streamline payments and speed up reconciliation
• Customisable reporting: track payroll costs, employee trends, and workforce patterns

Choosing the right software

Choosing payroll software means finding a system that connects to your bank and fits your specific workflow. Beyond essential features, evaluate how well the software integrates with your existing financial systems.

When comparing options, look for software that meets your specific needs:

• Bank feed integration: import transactions automatically to eliminate manual data entry
• Payment file creation: generate bank-compatible files for batch employee payments
• Cloud accessibility: access payroll from any device without software installations
• User-friendly interface: reduce training time and minimise errors with simple navigation
• Comprehensive payroll tools: handle calculations, deductions, super, and leave entitlements
• Business scalability: add employees as your business grows without system limitations
• Automatic updates: receive the latest features and security patches automatically

How much does online payroll cost?

Online payroll costs vary depending on the software provider and your business size. Most cloud-based solutions charge a monthly subscription fee, with some adding per-employee charges.

Here's what you can expect to pay for online payroll software:

• Software subscriptions: range from A$10 to A$50 per month for basic plans, with advanced features at higher tiers
• Per-employee fees: some providers charge A$2 to A$5 per employee per month
• Bank feed fees: usually A$5 to A$15 per month per connected account
• Setup costs: most cloud software has no setup fee, though accountant assistance may cost extra

Some providers charge extra fees that aren't immediately obvious. Watch for hidden costs:

• Per-payslip charges: some providers charge for each payslip generated
• Additional user fees: extra charges for multiple users accessing the system
• Premium features: advanced reporting or integrations locked behind higher tiers

What you invest often pays off. Automating payroll can save hours each pay cycle, reduce costly errors, and help avoid compliance penalties. Intentional underpayment is now a criminal offence under the Fair Work Act. Many businesses find the time savings alone justify the subscription cost.

Getting started with online payroll

Most businesses complete the setup process in 1 to 2 hours. Follow these steps to get started:

1. Choose your software: select a provider that fits your business needs and budget
2. Gather your information: collect your business details (ABN) and employee information (TFNs and bank details)
3. Set up your payroll schedule: decide whether to pay employees weekly, fortnightly, or monthly
4. Run your first pay: enter hours worked, review calculations, and process your first pay run

Simplify your payroll

Online payroll software takes the complexity out of paying your team. With automated calculations, built-in STP compliance, and Payday Super readiness, you can spend less time on admin and more time growing your business; get one month free.

FAQs on online payroll

Here are answers to frequently asked questions about online payroll for Australian small businesses.

How long does it take to set up online payroll?

Most businesses complete the setup in 1 to 2 hours. You'll need your ABN, employee tax file numbers, and bank details to get started.

What is Payday Super?

Payday Super is a reform taking effect on 1 July 2026 that requires employers to pay super at the same time as wages, rather than quarterly. It applies to all employers with eligible employees.

Do I still need an accountant if I use online payroll software?

Online payroll software automates many tasks, but an accountant can help with complex tax situations, end-of-year reporting, and strategic business advice.

Can online payroll handle different pay rates and schedules?

Yes, most online payroll software can manage multiple pay rates, schedules, and employee types, including casual, part-time, and full-time staff.

Is online payroll software secure?

Reputable online payroll software uses bank-level encryption and secure cloud infrastructure to protect your data. Look for providers that align with the ASD's Essential Eight security strategies.