If you are a small to medium-sized business in Australia, you have probably heard of the need to get STP (single touch payroll) set up to pay your employees.
As a business owner, it is a safe bet that you are probably already run off your feet. You have the general day to day running of your business, as well as things like marketing, invoicing and administration.
The last thing you want to do is add setting up STP to the mix – but this is a requirement by the ATO from 30 September 2019, so not really something you can ignore anymore.
Let’s have a look at what you need to know about STP and how to stop putting it off any longer.
What is STP?
STP, or single touch payroll, is a system of reporting your payroll information to the ATO.
STP provides information to the tax office every time you pay your staff including salaries and wages, pay as you go (PAYG) withholding and superannuation.
All Australian businesses with employees are required by the ATO to be using an STP system by 30 September (with some minor exceptions, including an approval deferral).
Larger businesses that employ more than 20 employees will already be using this type of reporting, but the ATO is bringing in changes to extend these reporting requirements to small and medium businesses as well.
From 30 September the ATO will begin chasing employers to get them onboard. They are reportedly already following up all large employers who have not commenced reporting through STP (including government departments).
There are still around 10% of large employers who are not yet reporting and only 5% (approximately 3500) who are not subject to a known deferral.
Let’s see what these changes mean for you and if you need to be scared (spoiler – you don’t!)
STP for Small to Medium Businesses
Businesses that employ 19 or fewer people need to get reporting through STP by 30 September 2019.
Businesses that employ less than four employees have some extra options to help them maintain their reporting requirements including low-cost products or quarterly reporting through BAS.
Using STP really shouldn’t be difficult at all, and you can do it through a number of popular bookkeeping software programs, including Xero and MYOB.
Don’t stress too much about making innocent mistakes (although try not to if you can help it!) The ATO won’t penalise business owners for making mistakes that they then correct as soon as possible.
At the end of the financial year, you need to finalise your STP data by making a declaration to the ATO.
Why is the STP a good thing?
Your employees can check on their year-to-date tax and superannuation payments any time they like through their myGov logins. This up to date reporting process means that your valued employees can keep on top of their super payments and make sure that they are getting the appropriate payments.
What if you won’t be ready?
If you need more time and won’t be ready to start reporting by 30 September, you can fill out an online form to request a deferred start date. Some software providers have already received a deferral for businesses using their reporting software – you can check with your software provider directly to see if they have a deferral.
What if you only employ family members?
Many businesses have staff who the ATO call ‘closely-held payees’ which means they are related so closely to the business that they don’t get paid through a regular wage system. This might mean family members of the business owners or directors or shareholders of a company.
Businesses with closely-held payees have extra flexible reporting options as well as more time before needing to get sorted. Closely-held payees don’t have to be reported until 30 September 2020 (although you can start reporting them sooner if you want to.)
In a Nutshell – What does this mean for you?
By 30 September you need to have started to undertake one of the following options:
- You might already be using current accounting or payroll software which has STP built-in. In this case, you may just need to make sure you have the most updated version and you are doing what you need to do when using the software to report appropriately.
- If you don’t use payroll software or the software you are using doesn’t support STP, then you can switch to new software that does.
- You can report through your bookkeeper or BAS agent if they are a registered STP payroll service provider.
- If you are an employer with less than four employees, you have access to special low or no-cost STP solutions specially designed so that the changes don’t burden small businesses unnecessarily. These include mobile apps and simple reporting portals.
If you are a business with fewer than four employees, you can use one of the STP products listed here.
There is also a full register of STP products here.
Get a hurry on and get a good bookkeeper to help you if you need guidance
If this all sounds a bit like accounting mumbo jumbo, you can chat to a good bookkeeper or registered tax agent to make sure you are doing what you need to do.
If you want to do some reading on STP the ATO has a pretty thorough series of webpages covering the basics.
If you want to get more information about what the changes mean for your specific business get in contact with us.