Single Touch Payroll

STP is compulsory now.

In fact it has been for a while. It has been possible to get concessions but these have have pretty much been ended and there is virtually no exception now to you having to report payments you make to employees to the ATO every single time you do a pay run.

The government explains STP as a way to reduce the reporting burdens on business. This is actually true. Using STP software for your pay runs is something every employer has to do anyway and having the software report to the ATO each pay run as you do it means you don’t have to do anything you wouldn’t have to do anyway.

You can read about it HERE.

But, of course, the real reason is that it allows the ATO to see that employees get paid correctly and exactly how much they get paid. This allows them to keep an eye on the employer (how often has “pay theft” been in the news lately?) and on the employees.

Jobkeeper (which has been an absolute and literal lifesaver for many, many businesses and individuals), would not have been possible without STP. It’s simply would not have been practical to have administered or overseen a programme like that in the old days of paper forms. Existing (Jobmaker, for example) and future government programmes will require you to have STP set up as well.

When you use STP software you do your finalisation report at the end of the financial year – this information is what the employee sees in their ATO account in MyGov. It it means their income summary for the year is marked as “tax ready” – the amounts earned are prefilled in their tax return.

So reporting, taxation and enforcement means that STP is here and here to stay – so get used to it!

So, do I really have to do this?

Short answer: yes.

Slightly longer answer: there is some concessional reporting exceptions. But these are very limited. You can read more about this HERE.

What is Single Touch Payroll?

You need STP software and there are a lot to choose from. There are the big ones everyone knows about. XERO (which we recommend), Quickbooks, MYOB and many more. For the full list of ATO accredited STP providers (including some free ones), go HERE.

It has to be said that the free options are rubbish and will probably drive you nuts. If you already have cloud based accounting software then it will probably already include the option of using it for STP.

If you don’t use accounting software then join the 21st century and get some. It will make your life so much easier and it will be a major benefit to your business and help you make money.

What’s so great about “cloud” accounting software?

It’s not just about making bookkeeping easier, faster and more streamlined – but modern “cloud” accounting software can have all kinds of extras added to it. You can get plugins for Customer Relationship Management, tracking mileage, tracking deliveries, Point Of Sale software, calculating project and job management time and fees, appointment setting and much, much more.

It’s also safe, reliable and backed up remotely (if your business burns down your financial records will be safe).

How do I set it up?

You can do it yourself. The major software providers put a lot of effort into making it easy for their users. But it can still be hard work. Especially if you are transitioning from a manual or desktop solution to online accounting/STP.

Wealthpath accountants can setup, transition and train your staff to make sure your move into the 21st century is smooth and effortless. Talk to us on 1300 268 800 for a free discussion on how we can help.

Here is a checklist.

Register with the Australian Tax Office for Pay As You Go Withholding (PAYGW). Your tax agent can do this for you. For more information – go HERE.

Choose what software you like. We are biased because we are a XERO Bronze partner but if you ask around, you will find that most people recommend XERO. But MYOB and Quickbooks are also very good. You can actually trial most software for free to help make up your mind. Once again, we don’t really recommend the free or ultra cheap software. You get what you pay for and we have a LOT of client’s that have come to us, with their account’s in a total mess, to get help with fixing the mess and moving onto reputable software.

Transition to the new software. You need to be careful with this one. A lot of the better software providers have tools to help you migrate your existing payroll records into the new software. But it can still be a problem. Make sure you check in the Business Portal or with your tax agent that you have set it up correctly. In other words, can the ATO see what you have done? Have you double reported?

(PRO TIP: when you do a pay run in STP software it actually takes 72 hours for the information to update in the ATO systems).

By the way

  • The ATO handle PAYGW but payroll tax is actually the state government.
  • You still need to register for PAYGW If you need to withhold taxes for whatever reason. Even if you don’t have an ABN.
  • STP applies to your employees but might also include other workers such as some contractors as well as suppliers who have not quoted their ABN.
  • STP reporting is being expanded. STP Phase 2 reporting will be starting on 1 January 2022. This is to gather more information for the tax man (and other government agencies).

There is another option

Get your tax agent to do all of this for you. Wealthpath Accountants can offer you a custom solution that meet your exact needs. We can do literally everything for you – or leave some of the work for you while we do the hard bits. Give us a call to discuss an affordable solution to best meet your requirements. Talk to us on 1300 268 800 for a free discussion on how we can help.