1 July 2019 marks the date that all employers in Australia must adopt Single Touch Payroll Reporting (STPR) however, there are some concessions available for employers of closely held payees.
Companies with 20 employees or more already have to comply with the new regulations, but how can smaller businesses prepare for what will be a significant change to their payroll process? To help, BDO held a recent seminar on STPR, and invited an Australian Tax Office (ATO) representative to give their view on the main ways SMEs can get ready for STPR.
Finding an STPR-ready solution
When preparing for STPR, the best place to start is thinking about what software will best suit your business. STPR requires companies to use a cloud-based integrated accounting and payroll software. Consider:
- What software do you currently use to report payroll?
- Does it already have an STPR function or do you need to upgrade?
- How many employees do you have?
- Will a mobile app be more appropriate?
- Do you require a low-cost solution (of which there are several - the ATO lists many of these on the STP solutions section of its website)
- What do you need to do to connect your software with the ATO?
To ensure your software is ready for STPR, it's best to talk to your software provider. Each provider sets up STPR a little differently to its competitors, so they'll be able to take you through exactly how it works on their individual platform, including how to update information or correct mistakes.
Making your employees aware of STPR
The new regulations will mark a significant change for employees too. They will be able to see all their payroll information, on their myGov account, including how much their employer is contributing in superannuation. STPR will have an impact on how employees do their tax returns, so it's important they know exactly what's happening and when. Encouraging employees to set up a myGov account will help them access this information.
Training is especially important if you have staff completing payroll - they will need to understand the changes to ensure they aren't making any mistakes when it comes to STPR, especially as end-of-year financial processes will change too.
Reviewing your people and processes
So many businesses, particularly smaller ones, are using outdated legacy systems, but STPR represents a good opportunity to review current payroll processes. Specifically:
- Are your employee records up to date?
- How often are employment agreements updated and are they still in line with Fair Work requirements?
- Do you have common mistakes occurring in your payroll?
- When mistakes do occur, is it because of your systems or your processes?
- Are contractors and employees sufficiently differentiated?
- Are your company details in your payroll system accurate?
- How are you reporting fringe benefits tax? Do you want to incorporate this into your STP reports?
If you're using manual data entry techniques for things like employee time and attendance, consider converting to an electronic system that will more easily integrate with STPR.
If you want to know more about STPR and what you need to do to be ready for 1 July, the ATO has a wealth of resources to help. In addition, BDO can provide you with tailored services so that any STPR function you introduce suits the unique needs of your business. Contact the team today for more information or download our STPR 5 step checklist below.
STPR 5 step checklist