How Can Single Touch Payroll Benefit Your Business?
With the inception of Single Touch Payroll, businesses are required to submit payroll report after each payday to the Australian Tax Office (ATO). These reports have to be submitted digitally in a specific format.
Understandably, shifting your payroll system from familiar Excel, desktop software or manual tools can feel overwhelming. But this change will be positive for your business. Here’s how it can benefit your business:
Earlier, businesses had to withhold amounts of an employee’s salary or wages and then submit their PAYG withholding on monthly or quarterly basis. This was clearly a misalignment in the payroll reporting process.
With Single Touch Payroll, government is trying to streamline the reporting process. Now, businesses can submit payroll information such as salaries, wages, deductions, allowances, immediately after the payroll event instead of deferring it to a later date.
No need for employee payment summaries
As you will be updating the ATO on pay-by-pay basis, you won’t be required to prepare employee payment summaries anymore. Single Touch Payroll will serve as a consolidated record for salary paid, taxes collected and superannuation paid. The employee can login to myGov and view their payment information online.
For the employers, the accounting department won’t have to spend time and money on processing, generating and distributing summaries for the employees.
For employers, with Single Touch Payroll, the ATO will be able to pre-fill business activity statements (BAS). This will significantly minimise human errors. It will prevent double handling and reduce error occurred while going over finances.
Not only will the employers avoid incurring penalties for making mistakes, but will also avoid paying someone to check the accuracy.
Single Touch Payroll will make information accessible for all the parties. As mentioned earlier, employees can head over to myGov to access their payment summaries.
On the other hand, employers can directly login to myGov to obtain tax file number and superannuation information of new employees. The HR won’t have to waste time or energy asking the employees to supply the information.
Digitalisation is the future of every industry. Even though right now it might feel like the government is forcing businesses to digitalise, it is a necessary evolution. Switching to the best small business accounting software that complies with Single Touch Payroll will encourage efficiency. If you wish to gain a competitive advantage, digitalisation is the way to go.
For a smoother transition to make your business STP-ready, you should work with your accountant or bookkeeper. They can help you figure out the technological aspect of it and also familiarise you with your obligations under STP.
You can look for free or low-cost STP software for small businesses. Finding the right software will make the transition much easier.
While presently you might feel switching to Single Touch Payroll is an inconvenience for your small business, it will come in handy in the future. By digitising your accounting software you will always have real-time access to information that will enable better business decision-making.