What you need to know about Single Touch Payroll as a small business owner
Medium to large businesses have had to use Single Touch Payroll (STP) since July 2018.
Now, it's time for the small businesses to hop on board.
As of the 1 July 2019, all Australian micro and small businesses (1-20 employees) must be using an STP approved software to do their payroll.
For those who don't know what STP reporting is, every time you run payroll, you now need to send through all of your data to the Australian Taxation Office (ATO).
You do this by using an STP compliant software to run your payroll. All the necessary information will be sent to the ATO through the program.
We recently wrote a blog about this, if you want more details about STP and why it's being brought in. We also give a few general tips about how to get on top of it.
In this post, we're going to cover what small business owners need to know about STP and how you can avoid being caught out.
STP approved software
You MUST be using a software that is STP compliant.
There isn't really a way around this.
If you're currently using an online payroll software, check to see if it's STP approved.
It's likely that it already is but it's best to check so you don't get caught out.
If you're not currently using one, there are a number of different programs on the market for all business sizes (we recommend Payroller).
Be careful of hidden conditions when choosing your program as lots of the low-cost solutions cap you at 4 employees and really start to ramp up prices to add more employees. If you're looking to grow your business in the future, this might be something to keep in mind.
You won't need to worry much about STP if you pick the right solution as it should do all the work for you.
Grace period for small businesses
You might be aware that the ATO announced that there was a grace period to help with the transition.
While this is true, it's only for small businesses who request to do this.
So, if you haven't put in a request by the 1 July and you're not using STP, you could be in trouble.
If you think you need extra time for whatever reason, put in a request for an extension and the ATO will allow you to put off the move to STP until the 30 September.
We would recommend making the move to STP before you resort to this option but it is an option if it's not feasibly possible.
Ultimately, you're going to have to make the move at some point so keep that in mind when making your decision.
STP will make it easier for you
With all of your information sent to the ATO, it will no longer be your job to provide your employees with certain types of information when it's tax time.
Your employee will be able to find their year-to-date tax and super information via the ATO's online services.
This data comes from your STP reports and updates with every report made. Before this, this reporting was only done at the end of each financial year.
You will still need to finalise your STP data at the end of the financial year so the ATO knows that you've completed that year's reporting.
You won;t need to provide a payment summary to employees as they can now access it through the ATO's online services. This is where they'll get their information to lodge their income tax return
There is also no longer a need for payment summary annual reports as it will all be reported and calculated through STP.
We suggest talking to your accountant or bookkeeper further if you need additional information on this.
STP doesn't have to be worrisome if you get the right software.
Despite the grace period, we really do recommend just jumping on an STP approved program as you will have to eventually.
Payroller is a great option for small businesses. It's simple for you to use and it's cost effective.
Check out our demo if you don't believe us.