If you are a small business owner, chances are you have heard about Single Touch Payroll. STP was something that was introduced by the Australian Taxation Office early in 2019 and was deemed mandatory for larger businesses to switch over to in July 2018. The deadline for small businesses to switch over to STP is now looming around the corner, with SMEs having to transition into STP by 30th of September 2019. In today’s article, we have a look at what exactly STP is and how it will affect small businesses around the nation. Read on to find out more!
What is STP and What Do I Need To Know?
First up, what exactly is Single Touch Payroll? Simply put, STP is a new regulation enforced by the ATO that changes how and when small businesses report their payroll. In the past, businesses reported their payroll to the ATO on an annual basis. Once STP is in effect, businesses need to be sent to the ATO digitally and on a paycheck to paycheck basis. Reports must be sent the ATO in a very specific format, which Single Touch Payroll software can assist with.
In the past, small businesses finalised payroll records at the end of each financial year and had to send in payment summaries for each employee. With new STP regulations in place, businesses can be rid of annual payment summary reports. STP software will instead provide the ATO with pay-by-pay reports and business owners will only have to notify the ATO when the last pay run for the year has been made.
Say Goodbye To Employee Payment Summaries
Another thing that business owners can say goodbye to with the introduction of STP is employee payment summaries. The ATO will use Single Touch Payroll as the sole record of wages paid, superannuation contributions and taxes paid. Your employees will have access to all of this information by simply logging into their myGov accounts where all their payment summaries will be available to them 24/7.
Everything is Going Digital
With the introduction of Single Touch Payroll, there will no longer be any paper forms for reporting payroll activity to the ATO. Instead, all reports should be sent in digitally with the aid of STP software, and always in accordance with a very specific Single Touch Payroll compliant format known as Standard Business Reporting. Depending on what payroll software you are currently using, you may or may not have to upgrade your system to one that can generate complaint reports for you.
Most Importantly, When Is The Deadline?
The deadline to switch over to Single Touch Payroll for larger businesses with 20 or more employees was in July 2018. As mentioned above, the deadline for small businesses to switch over is 30 September 2019 which is just around the corner. If you are a small business that has yet to switch over to STP, we urge you to look into it as soon as possible.
What Are My Options?
Last but not least, as a small business, your options will differ depending on your current reporting structure. If you are already utilising online payroll software, always check that it produces ATO compliant reports. For those who are using desktop payroll software, you will need to find a service that can upload all your reports, convert them to a compilable format and submit them online on your behalf. Lastly, if you are still working with paper or spreadsheets, you will need to find a service that can convert your physical data into a compliant digital format that is ready to be sent off to the ATO.
We hope that this article has given you some valuable information when it comes to Single Touch Payroll. Just because you are a small business doesn’t mean you have to struggle when it comes to the switch – with a little know-how, the right software, and diligent planning, you’ll find that your transition into STP is one that is welcomed with great ease. Best of luck!