Change is coming for Australia’s 730,000 small business owners with less than 19 employees. With the ATO legislation for Single Touch Payroll (STP) going into effect from 1 July, countless small businesses will be required to start using accounting software technology for payroll reporting. Some for the first time. However, research from Xero shows that many either don’t understand their STP obligations, or fear that becoming compliant will cost them valuable time and money.
Here at Xero, we think it’s time to clear up the confusion. So, we reached out to our partner community of accountants and bookkeepers to discover the top five questions they’re being asked about STP from their small business clients. From the what to the why, founder of Bookit Bookkeeping Karen Kennedy assures us there’s nothing to fear as she walks us through her STP Q&A.
1. What even is STP in the first place?
A lot of people have come to me asking, “What’s this STP thing?” All it means is that every pay run you now need to digitally report your year-to-date figures to the ATO via STP-enabled software. That’s salaries and wages, PAYG withholding, and superannuation information.
2. So, do I have to do it?
The short answer is, as an employer, yes you do. And as long as you always pay your staff on time, you’ve got nothing at all to fear. Better yet, if you already use accounting software like Xero, becoming STP compliant is (quite literally) as easy as pressing a button when you post a pay run.
3. What does STP actually mean for my business and employees?
If you haven’t made the move yet, transitioning to digital is set to save you a whole lot of time and effort, not to mention minimising the chance of errors. And now that the ATO are receiving updated information through STP, they’ll be able to discover who isn’t paying employees on time, the correct amount, or super – all of which is great news for employees everywhere.
4. What does the ATO see under STP legislation?
All the ATO sees are the very same details I mentioned above: year-to-date figures, salaries and wages, PAYG withholding, and superannuation information. Rest assured, they aren’t viewing full payslips, employee addresses or any other personal data. Basically it’s all of the things they previously would have seen; now in real time.
5. Will I be fined if I do it wrong?
During the first year of STP, the ATO has said they won’t be fining businesses that are making the effort to comply with the law. But it always pays to be prepared. Now is the time to find the best software solution for your business, enable STP and get reporting.
And there you have it: STP demystified. For those who are yet to make the switch, Xero’s research indicates that small businesses currently using digital payroll software report decreased errors, savings in time and money, and increased employee satisfaction. If you have any queries or concerns regarding all things STP, simply reach out to your bookkeeper or accountant.
The post A trusted advisor tells: The top 5 questions I’m being asked about STP appeared first on Xero Blog.