Single Touch Payroll and How to Get Your Business Ready

Single Touch Payroll and How to Get Your Business Ready

If you run a small business with 20 or more staff, you should be preparing for the Single Touch Payroll initiative.

From 1^st July 2018, the Australian Taxation Office’s Single Touch Payroll (STP) rollover begins. The new system, which changes the way employers report to the ATO, will require small business owners with 20 or more staff to upgrade or replace current payroll systems.

What is Single Touch Payroll

Single Touch Payroll is ATO’s latest compliance regulation. It offers a more streamlined reporting system, which enables you to track costs and analyse trends.

All employee tax, super, wage and PAYG withholding information will be reported to the ATO through the new software. This will be a significant change from the current system, which is lodged through paper or manual submissions.

What’s in it for You

To be eligible for the transition, your small business must have more than 20 staff (headcount, not full-time equivalent) as of 1^st April 2018.

Once the new system is fully rolled over in 2019, the information you report on over the next financial year will be pre-filled into future activity statements.

This data will also be pre-filled into myTax, resulting in an easier process for anyone who prepares their own returns. Businesses will have real-time access to payments to allow for a smoother and more efficient reporting processes.

Small Business, Big Benefits

Single Touch Payroll reporting will enable everyone within the business to see more up-to-date tax, pay and super information. Making the switch comes with big benefits for small business owners and staff. Some of these include:

Employers

• No need for payment summaries: STP makes all information easily accessible online via myGov, eliminating the need for pay summaries to be generated and distributed to staff.
• No double handling or potential errors: ATO will pre-fill fields W1 & W2 in your BAS, eliminating the headaches of double handling.
• Streamlined reporting: Payroll is combined with your pay run process, offering valuable time savings come the new financial year. STP includes up to 50 management and accounting reports. These reports can be exported to compatible accounting systems.
• Automatic reporting: Accumulated leave is worked out automatically and payments are handled in accordance with legislation. New employees have access to quicker online commencement forms, including Tax File Number declaration. As a result, compliance efficiencies will increase.
• Interactive: STP links with electronic banking and tax office so all numbers add up.
• No extra cost.

Employees

• Efficient tax returns: All payroll information is pre-filled into your tax return and you won’t have to wait for a payment summary to complete.
• Real-time access: Easily view your superannuation, income and tax via myGov.
• Electronic commencement forms: Having quick and easy access to all online forms makes starting a new job easier.

Getting Your Business STP Ready

On April 1^st, 2018 the ATO warned small business owners to do a headcount of staff to determine whether the new systems applied.

For small businesses with 19 staff or less, switching over to the Single Touch Payroll system is voluntary. However, the transition is scheduled for 1^st July 2019 which is subject to the passage of legislation in Federal Parliament.

For everyone else, getting your business STP ready is mandatory this year. Here’s what you can start doing now:

1. If you already use a MYOB payroll solution, you can update to the STP system. No matter what product you use (MYOB Advance or MYOB Exo), MYOB will have you covered from 1^st
2. Check with your accounting software provider whether your current payroll systems will support the changes.
3. Make sure payroll staff are advised about the changes.
4. Review old payroll systems and update employee information before 1^st Check you’re paying staff correctly including super entitlements.
5. If you need more time or your software provider isn’t ready, contact the ATO today to apply for a deferral.

Free STP checklists can be downloaded from the ATO website.

Horizon Business Systems is Perth’s leading business accounting software solution provider. We pride ourselves on our tailored customisation of products to suit all business requirements, with superior ongoing support for our clients. Contact us today for more information.