Do you satisfy the following criteria:
- My business employs people
- We don’t currently do single touch payroll
- Not sure if we are single touch payroll ready
If you satisfied all of the above points, then this article is specifically for you.
What is Single Touch Payroll (STP)?
STP was legislated in 2016 and was implemented into businesses with greater than 19 staff from 1 July 2018. It’s now the turn of all other employers to become ready to implement the system from 1 July 2019 – yes, that sounds like you have plenty of time but why wait until the last minute… there’s nothing stopping you from getting organised today. The information that will be reported to the ATO by you includes payments such as gross wages, tax withheld from pays and superannuation. This will happen at the same time that you pay your employees and will be reported direct from your payroll software.
What does this mean for your Business?
Manual payroll will be no longer viable.
In Australia, many small and micro businesses either record their employment information in a manual book or other tools such as excel. Neither solution will work for you from 1 July 2019. We therefore recommend looking for a solution that suits your business – this may be a great opportunity to include it in your accounting software so that the manual data entry is removed.
If you personally (e.g. as a Director of a company), also an employee, these new rules apply to you. It doesn’t matter if you employ 1 or 1,000 staff, the rules apply to everyone.
Additionally, you will also need to keep in mind the following:
- Review the software you are currently using – is it Single Touch Payroll compliant?
- Depending on the software you choose, you may need to consider obtaining an AUSkey
- The way you report to the ATO will change. Previously, you will have reported the payroll information to the ATO on your monthly or quarterly BAS’s. This process will cease as the information will be feeding directly to the ATO at each pay run.
- End of Year becomes simpler. There will be no Payment Summaries to produce and no ATO reporting.
- You and/or your staff may need training and education as to the setup and implementation of the new system.
- If your payroll is currently being prepared by a bookkeeper or accountant, you will need to ensure that they have reviewed their software.
What does this mean for your Staff?
- Their wage, tax and superannuation information will be in their myGov. If they currently do not have a myGov account, we suggest that you discuss the need for them to obtain one as this will be the only means by which they can access this data.
- The myGov account will update each time the employee is paid.
- The Payment Summary is being renamed to an “Income Statement” and this will also be sent to the employee’s myGov inbox.
- Employees will be able to check in the myGov account if their superannuation has been paid.
Making the ‘Right’ Choices
In business, you firstly need to surround yourself with the right people – that’s not only staff but the right customers and suppliers as well. The other thing to ensure you have right, is the correct tools. Over many years of reviewing business’s tools and processes, I’m always amazed at where businesses choose to scrimp. Only last week, I was having a discussion with one of the enterprise resource planning (ERP) system providers about this exact problem. The manufacturing business in question turns over in excess of $5m, they import stock from overseas to multiple locations – due to lack of controls, they either have excess or insufficient stock. This obviously costs their business a lot of money, however, when they considered having to spend money on a larger system that could solve all of these issues, they chose the ‘it’s too expensive’ path and did absolutely no analysis on what it’s costing them in lost sales, downtime, cost of holding excess inventory, and so on.
Yes, it may be seen as a pain that the Government are forcing your hand but take it as a positive – it’s a great opportunity to review not only your payroll system but to also look at how other things are being done across the board, either manually or electronically. Can they be improved? Are there better alternative systems or should you upgrade what you are currently using? There are a great many efficiencies that can be put into your business through integration. What that means is, put simply, you can have all your systems ‘talk’ to one another. This may include accounting, payroll, point of sale, CRM, document management, plus many others. Having integrated systems provides you with a stronger ‘big-picture’ view of your business, thus allowing you to make smarter and quicker decisions as you become more informed.
Single Touch Payroll will creep up on your business, and the last person you want chasing you is the tax-man! Now is the time for you to find out what your next steps are to ensure your business complies with the legislative changes.
“The opinions expressed by BizWitty Contributors are their own, not those of BizCover and should not be relied upon in place of appropriate professional advice. Please read our full disclaimer."