Single Touch Payroll for Small Businesses
Single Touch Payroll, or STP, is the latest change to how businesses report their payroll activity to the ATO. All Australian employers (including Small Businesses) are now required to report using STP as of September 2019.
Historically businesses would report their employee payroll information to the ATO once a year – at the end of the financial year. But now reports must be sent to the ATO on each pay date – they must be submitted digitally at the same time the employees are paid allowing the ATO to track compliance in real time.
Do I Need to Use Single Touch Payroll?
Single Touch Payroll became compulsory as of 1 July 2018 for businesses with more than 20 employees.
For employers with 19 or less employees, they became required to use STP as of 1 July 2019 (although this then got extended to September for businesses that were still grappling with the technology.
Some relief is still available if you have between one and four employees. At that level you’ll be classified as a micro-employer and although you still need to report using STP, but you can report quarterly, instead of per pay cycle which makes some small, some inconsequential, difference.
Employees who contribute towards your Single Touch Payroll count include:
- Full-time employees
- Part-time employees
- Casual employees
- Paid Directors and other Corporate Officeholders
- Overseas employees
- Employees on paid or unpaid leave
How Does it Work?
If submitting your payroll details regularly sounds daunting, there’s no need to panic.
If you’re using a cloud-based payroll software, like Xero, Quickbooks or MYOB, then your software will be STP-ready. Everytime you use the software to pay your employees their tax and super information will be sent automatically to the ATO.
You will likely need some support with the initial setup of your Single Touch Payroll (so you don’t end up having to correct dozens of payrolls later on) and in rare cases have to pay an additional add-on fee to the software provider depending on the provider you choose.
Once you’re set up with your cloud-based software, you’ll be able to simply pay your employees as normal, and your STP-required information will be submitted with the click of a button.
What Else Changes With STP?
- You’ll no longer need to provide a payment summary report with wages, taxes and super contributions to each of your employees at the end of the financial year in order for them to complete their personal tax returns.
- You won’t need to provide annual payment summary reports to the ATO for the business’s paid wages, PAYG withheld and total super contributions.
- Some form-fields on your BAS statement will be pre-populated with your submitted information (but you can still edit them). Which can save you quite a bit of time!
At the end of the day despite the additional admin burden, Single Touch Payroll should make your life easier long term. You’ll save time filing your end of year reporting to your employees and the ATO and hopefully reduce errors as much of your online documentation will now be pre-filled if setup correctly! Onboarding new employees will also be easier with online commencement forms for Tax File Numbers and SuperChoice.
If you still have questions about Single Touch Payroll, or just want someone to set it up for you to avoid any mistakes, call us today on 1300 900 938 or get in touch online for a confidential and completely free chat about your business.