As an employer, the end of the financial year can be a stressful time. Not only are you worried about your own taxation, but you’re also having to take into account the taxation of employees and all those long-winded employee statements.
If only there was a better way, right? …Cue, Single Touch Payroll.
Single Touch Payroll (STP) is a simple way to report your employees’ payroll information to the Australian Tax Office (ATO). It keeps your business compliant by automatically reporting to the ATO your employees’ payment summaries and group certificates during regular payroll periods, rather than having to send them all through at the end of the financial year.
During tax time, the burden is lifted. Your employees can jump on the myGov website and easily access their tax and super documents that have been sent to the ATO.
Who uses STP?
Simply put, the answer will soon be everyone. In the past, it was mandatory only for businesses with 20 or more employees to lodge through STP. According to the ATO, smaller businesses with 19 employees or less had the option to opt into the service, however, lodgement wasn’t compulsory.
But, this is soon about to change. As of July 1 2019, all businesses are required to use STP to lodge payroll statements for their business and their employees.
But, how does it work?
If you’re a small business, getting a head start and learning how STP can benefit you and your business is essential.
STP works by sending employee tax and super information from your payroll or accounting software to the ATO in real-time. When you run your regular payroll, your STP-enabled payroll software will then send a report to the ATO, which would include all the information they need from you on your employees. Think salaries, wages, PAYG withholdings and superannuation – all wrapped up in a weekly, fortnightly or monthly package (your regular pay-run) and sent off to the ATO for review.
It’s pretty simple to understand, but how does it benefit you as a small business owner? Well, we’re glad you asked.
It saves you time and resources
For you, STP will win you back countless hours during the EOFY, and you’ll no longer have to provide a payment summary annual report (PSAR).
According to the ATO, the way your STP information is sent to the ATO will depend on the software you use. These include:
- An end-to-end solution, which allows you to run your payroll and send the STP information directly to us from your software
- A solution which allows you to run your payroll and send the STP information through a third party sending service provider (SSP) integrated into your software
- Or, a solution that allows you to run your payroll, but requires you to send the STP information through a third party SSP outside your software.
It’s easily accessible for your employees
Lodging STP regularly means you’ll no longer have to issue employees payment summaries and group certificates for the information you’ve reported through STP, as this will all be available for them through their myGov accounts.
STP means your employees have access to payment summaries, pre-filled tax return forms and online commencement forms, meaning employees or their registered agent will be able to lodge their income tax using STP information only.
Getting started with STP
At Business Tax & Money House, we’re experts when it comes to STP. We work with affordable, easy-to-use software and can comfortably advise you on how the process works. Or if you’re really time poor, we can even assist in managing the entire process for you.
If you’re interested in setting up STP with us or finding out more, contact us today.