In less than two weeks, the Australian Taxation Office (ATO) will introduce Single Touch Payroll (STP) overhauling the way businesses report employee information including wages, superannuation and PAYG taxes.
As reported by Hospitality, from 1 July 2018, employers with 20 or more employees will need to report their employees’ tax and super information to the ATO through payroll software that is STP ready.
Food service businesses will be impacted by the changes, yet many are unaware or unprepared. Rob Stone, national partner director at Xero Australia, has provided some important tips to help business prepare for STP.
1. Check whether your business will be affected by the changes
Although STP kicks off in July, you’ll need to cast your mind back to April to determine whether your business needs to be compliant. If you employed 20 or more people on 1 April 2018, then you’ll need to start getting STP ready now. Even if your headcount has dropped below 20 since April, STP will still apply to you. If you employed fewer than 20 people, you may still be affected by STP in the coming year: it is likely legislation will be approved that requires employers of all sizes use STP from 1 July 2019.
2. Understand how it affects your payroll
There’s less than two weeks until the changes kick in, so use that time to ensure you’re fully prepared and to understand how it impacts you. If you already use payroll or accounting software, speak with your provider and check that they offer STP reporting. If they don’t or you aren’t using any software, it’s a good time to think about your business needs and how the right system can not only help you be compliant, but help you more effectively manage your business as it grows. Businesses should also be checking their employee information is accurate, including names, addresses and dates of birth.
3. Keep it simple
The rules for reporting are changing, but that shouldn’t mean huge amounts of additional work for your business. Compliance should be simple. Ensure you do some research, as different providers will have a solutions with varying levels of complication. We’ve built STP functionality into the normal pay run process, so it’s super straightforward to stay compliant.
4. If you’re not affected now, it doesn’t mean you can’t plan ahead
Even if you had fewer than 20 employees on 1 April, you probably have just over a year to prepare for STP given the expected changes to the law. So, if you’re working from paper or spreadsheets, don’t wait until next June to investigate which software options are right for your business. A recent report found that nearly four in ten (39%) accomodation and food service businesses were still using paper or spreadsheets to do their business accounting, and could benefit by switching to accounting software as part of their STP compliance obligations. Accounting software is designed to make managing a small business easier, giving you a clear snapshot of how your business is actually tracking, and therefore the best chance of success.
5. Secure your business
Finally, the STP change is a good opportunity to also ensure your business data (including sensitive payroll information) is secure against theft or misuse. The ATO has mandated that small businesses with tax information in the cloud use two-step authentication (2SA) by the end of the year. Two-step authentication is an extra layer of security that requires a password and username and a unique code to be generated on a second device, making it more difficult for unauthorised people to access your data. Even if you’re not using online accounting software, it’s good practice to start the financial year fresh, change all your passwords and enable 2SA, if possible.