Single Touch Payroll: A New-Business Guide to STP
Single touch payroll, or STP for short, filled businesses with fear only a few years ago when the Government announced that it would become mandatory.
11:45 08 June 2020
Why do we need to use STP software? How will this fit in with my current processes? How will I know if I am compliant with ATO legislation? These are all questions that most business owners found themselves asking and if you're setting up a new business then you may find yourself asking them too. The truth is that STP software will bring with it many benefits that will allow you to provide accurate and tractable reports and free up a lot of time you’d have typically spent on payroll. Continue reading to find out what you’ll need to consider when it comes to single touch payroll and your new business.
What Is Single Touch Payroll?
In a nutshell, STP is a more streamlined and digitised method of reporting tax and superannuation information to the Australian Tax Office to ensure employers are meeting their obligations. The legislation came into effect in July 2018 when all businesses that had 20 employees or more had to switch to STP, with most choosing to use STP software to support the transition. All other small businesses then had to follow suit by 2019 which means in the present day anyone setting out on a new business adventure must also comply with single touch payroll.
What You Need To Know
There’s some other points you should consider if you have four or less employees. STP solutions that come with a significantly smaller price tag than your typical STP software could be the answer for you. Micro employers were considered when the legislation was passed and it was agreed that they would need to report through STP but wouldn't necessarily need to purchase single touch payroll software. You can find more information about solutions such as mobile apps, online portals and simple report templates on the ATO website. If you still want to invest in software to support growth then that’s ok too, do whatever suits your needs. It’s also worth knowing that you will be required to report a pay event to the ATO on or before the employee’s pay day. This gives you an idea about the frequency of reporting. They don’t just want annual and monthly communications they’ll be expecting to hear about each pay event. Don’t worry though, if you’ve invested in STP software then the pressure is off, your software will take care of it.
The Benefits Of STP Software
The most lucrative benefit of single touch payroll software is the streamlined reporting process. The ATO is likely to slap a hefty fine of up to $1050 into your mailbox should you miss your report deadline so it’s in your best interest to let your STP software remember all your deadlines for you. Not only will you never fail to send a report but you can rest assured that the included information will also be STP compliant. With the new process comes new titles and abbreviations which can be difficult to fully comprehend for one member of staff. Relieve their apprehension and eliminate the risk of human error by leaving the task to your STP software.
The last thing you want to get caught up with when setting off on your new business venture is single touch payroll. Remove the burden by exploring all your options and investing in STP software.