Single Touch Payroll – Are you reporting?
I know that you have enough to think about as a busy business owner, but there is one more thing you need to make sure gets done – Single Touch Payroll.
If you have popped your head in the sand a little bit about these obligations hoping that they’ll go away if you stay quiet, this may not be the best option. Time for a new plan!
Let’s break these obligations down for you and make them less scary. What are your obligations for reporting Single Touch Payroll (STP), and what is the easiest way you can ensure these are met?
What are your Obligations for Reporting Single Touch Payroll?
From 30 September 2019 (yes – that has already passed!), all business owners in Australia with employees are required to start reporting their payroll details to the tax office through STP. This lets the ATO know each time you pay your employees, including all the details, any tax withheld (PAYG) and superannuation contributions.
There are some exceptions, including for businesses that only pay family members (for the moment – your time is coming!) and some others who have an approved deferral start date. Basically, anyone else needs to start reporting STP, well, ASAP.
Any business that employed more than 20 people was already required to do this by the ATO, but from 30 September this adds all small and medium employers as well. From this date, you need to be complying, or the ATO will start chasing those who don’t.
What is the Easiest Way to Start Reporting Single Touch Payroll?
Most bookkeeping software programs have been updated to include the ability to report STP – so if you are using one of the more common ones such as Xero or MYOB, you have this capacity already.
There is a full list of registered STP products here if you want to check if your provider is one of them:
If you are a micro-employer and have less than four paid staff, you have access to a few extra low-cost options for reporting, including the option of quarterly reporting through your BAS. There is a list of STP products for micro-employers here:
Some software providers have an approved deferral date for any businesses using their bookkeeping software as they haven’t updated it yet. You need to check with your provider to see if they are one of the agencies with an approved deferral.
When Your Staff are Like Family…
If you are a small business that only has family members on the payroll, or just pays directors or shareholders, the ATO recognises these kinds of employees as ‘closely-held payees’.
If you only have closely-held payees you don’t have to start reporting STP until 30 September 2020, but you can get a head start on reporting anytime before then if you want to.
But I’m Still Not Ready!
You can still arrange an approved deferral start date for reporting through the ATO if you are a business employing 19 or fewer people. You or your tax agent can contact the ATO directly or apply online here to seek your deferral.
According the ATO, deferrals will be considered if you:
· need more time to start STP reporting
· are unable to get ready by your software provider's deferred start date
· are transitioning to a new STP-enabled solution
· are using customised payroll software and need time to configure and test it
· have complex payroll arrangements and need additional time to transition
· have entered administration or liquidation
· have been impacted by a natural disaster
· are affected by other circumstances out of your control.
What if You Don’t Report STP?
Don’t stress too much about getting everything 100% right with STP from day one – the ATO seems to be taking a kind approach to ease businesses into the system. As long as you are honestly trying to do what’s right under your obligations, you can chat with them about fixing any mistakes you make while reporting (or by not reporting).
What You Need to Do Now:
You need to get started with reporting STP by doing one of the following:
1. If you already use accounting software, check that you have the latest version because most of them will have STP service built in automatically. Make sure that you are doing what you need to do with your specific software to get reporting started.
2. If you don’t use payroll software with STP, get started with one that does.
3. If you have a bookkeeper or registered BAS they may be able to report for you. Check that they are a registered STP service provider.
4. If you have less than four employees, look into your cheaper options for STP, but you still need to get started.
5. If you only pay closely-held payees such as family members, you have until 30 September 2020 to get started.
6. If you feel that none of the above options is possible for you, get in contacting with the ATO to request an approved deferral date.
This service has been brought in not to terrorise small business owners or make their lives harder, but to ensure that all employees are being looked after. It means that employees can check in real-time if they are being paid correctly, including tax withheld, super and also leave accrued.
Small businesses of Australia – I believe in you!
You can do it – pull your financial head out of the sand and embrace STP. And if you still have no idea what’s going on, feel free to give me a call.