Business owners like us are typically working around busy schedules, focusing on Salesand managingoperations to ensure the delivery of products and servicesto customers; and we all know, the staff are one of the key elements to make the above happen.
While managing staff roster and pays are already challenging for small business owners, ATO had started the new way of reporting tax and super information to them directly from your business’ pay run process.
This requirement was effective from 01/07/2018 for larger employers and from 01/07/2019 for employers with 19 or fewer employees. Yes, ATO provides someconcession period extensions for micro employers, butas this is the compliance going forward, why wait for the last minutes to do it and take the risk of getting a penalty if pass due date?
For those who are not familiar or haven’t really got time to read the ATO’s detailed explanations of STP, here is the quick summary:
- Single Touch Payroll (STP) is a compulsory reporting requirement that business owners have tosend the information from each pay run to ATO before or at the time of paying.
- The information reported to ATO are sent through STP enabled software; in other words, business owners are required to use an STP enabled payroll software to process the staff pays and send information to ATO at the same time.
- STP reporting saves the business to provide the PAYG Payment Summary (Group Certificate) at the end of the financial year, while enabled the employees can check their year to date information through their myGOV account. Please note, business still needs to provide the payslip at each pay run to their employee.
- For ATO, STP enables them to collect important data like the wages paid, tax withheld from wages, and superannuation so they can monitor the lodgements and tax and super liabilities closely.
I would like to share 3 ways for business owners to manage the STP requirements:
- ‘Free’ appsfor a mobile phone — you can search on the apps store from your iPhone or Android smartphone with the key works ‘STP’ payroll. Softwares like ‘Reckon Single Touch Payroll’, ‘Easy Payslips Payroll’, ‘Singe Touch Payroll – STP’ will show up on top of the list. Those apps are able to manage basic functions while being compliance. Feel free to try them out.
- ‘Low Cost’ Software on a computer – there are lots of Low-Cost STP software on the market, and some of them are from well-known accounting software developers like Xero, MYOB, Quickbooks, Reckons, etc. Those software only cost about $10 per month and support upto 4 staff at max. It is very affordable butrequiresa reasonable understanding of the payroll system to set them up. Business owners can manage it themselves but please be aware that some of these software has no option of upgrading which means if your business has 5 employees, you need to pay for the ‘next level’ package software and you won’t be able totransfer the current data to the new software automatically.
- Accounting software with integrated full function payroll module – this is the ‘next level’ software compares to the Low-Cost option at point 2 above. Those softwares are designed to handle complex payruns, even with EBA and Awards; they are not necessarily expensive in price but require a very good understanding of payroll system and compliance requirements to set it up. Payroll can be tricky and there are lots of compliance around the entitlements, pay rates and super.
From my view, the best and most effective way to handle pay run is to engage a qualified Tax or BAS agent. I have a client with accounting backgroup was trying to set it up themselves but end up with information overload and frustrations after spendinghours after work to do researches and studies from the ATO website. When we service our clients, we are not only providing the solutions but also look into improving the efficiency from the process. Our expertise and resources empower you as the business owner,always in control ofyour pay runs& compliances, and allocate more resources focusing on your business’ income generation activities.
One question as last: compare to option 1 and 2, how much do you value your time on trying to configure the software and troubleshooting? Please put a dollar amount to it and think again to see if the ‘Free’ or ‘Low Cost’ options are the best way of spending your valuable time?
If you would like to know how we can help you and your business, please feel free to contact me now.