Nothing gets the heart rate up like a letter from the ATO spelling out a new compliance requirement. It’s not like small businesses today don’t already have enough on their plate, without the ATO giving you more to worry about.
Let us help you answer these 5 questions so you can dial down the stress and turn that anxiety into a sigh of relief:
- What is Single Touch Payroll (STP)?
- What’s changing for my business?
- When is it changing?
- What do I need to do right now?
- What help and support is available?
Here’s your quick guide to everything you need to know:
1. What is Single Touch Payroll (STP)?
Single touch payroll is the process of using payroll software to automatically report employees’ wages, tax and super information to the ATO, each time they are paid (i.e. each pay day).
This ATO requirement has been introduced for certain types of business from 1 July 2018.
2. What’s changing for my business?
Previously, the ATO granted exemptions for certain types of businesses, meaning some businesses did not need to do STP reporting.
One of those exemptions was for businesses where the person(s) being paid by the business is directly related to the business, instead of being a normal employee. For example, the person being paid is the business owner or family member.
These are sometimes referred to as closely held payees, and are described by the ATO as where the person being paid is either:
- A family member of a family business
- Directors or shareholders of a company
- Beneficiaries of a trust
There were also exemptions for other types of small businesses which meant they did not need to do STP reporting.
These exemptions are now ending, meaning all small businesses, including those with closely held payees are required to perform STP reporting.
In simple terms, this means that even if you run your own business and pay yourself at irregular frequencies, you still need to report these payments to the ATO via Single Touch Payroll software.
3. When is it changing?
STP reporting will be required for these businesses from the start of the financial year, on 1 July 2021.
4. What do I need to do right now?
To get yourself ready for this, you need to find an ATO approved Payroll/STP compliant software solution that you can use for your business.
Once you’ve found a solution that you are comfortable with and that works for your business, you’ll be ready to go when July comes around.
Different software options will have different features, and will differ in terms of ease of use and cost. Using the right technology can save you a lot of time and trouble. By the same token the wrong technology can give you headaches and waste your time. So it’s worthwhile having a think about what will work for you.
Here are some ideas think about when considering your options:
- How easy and quick is it to set up and use? (You shouldn’t need an accounting degree!)
- Does it have the features you need? (e.g. options for director fees, different types of super, etc…)
- Ease of access: Do I need to use the same PC each time or is it cloud-based? Can I use a mobile phone or tablet?
- How much does cost?
- What kind of support is offered? Email or phone? Is it local?
- Are there other hidden steps to being compliant, like having to contact the ATO to register your software?
What other factors are going to make a difference to you?
Have a think about these things in terms of how you run your business and what’s important to you.
5. What support is available?
Your accountant or bookkeeper will be able to provide advice, and the ATO has plenty of online resources.
You can also talk to the support team at Easy Payslip, who can answer your questions and help you understand STP reporting.
Got some questions or thoughts? Comment below or get in touch with us.