Ever since the use of Single Touch Payroll (STP) systems was made compulsory by the Australian Taxation Office, many businesses are trying to get compliant. Not all might be willing to make the change unless they understand the benefits they are likely to enjoy with the new system. That is what we want to look at today so that you have an idea of what STP will do for your business and why need to make the changes now.
STP is good for streamlining the reporting process
In the past, a company had to generate a different report for submission to the Australian Taxation Office (ATO). However, that takes a lot more time and creating unnecessary reports which can be avoided. It is why you need to use the STP system. With this system, the processes are streamlined and all the information is sent at once when generating the payroll at the end of the month.
Some of the information to be submitted to the STP system includes the salaries, allowances, any deductions, PAYG, and much more. As you can see, the reporting process is now streamlined and the ATO gets all the information at once.
Minimizes the chances of errors
Human error when filing for tax information can sometimes lead to an inaccurate accounting of revenue by the ATO. It is why we are moving towards automated submission of such information.
Once the Single Touch Payroll has been set up, the ATO prefills the business activity statements with labels W1 and W2 for the employers. With the right classification, you would know what type of information you are supposed to file. The last thing an employer wants is to incur penalties for reporting the wrong information.
It should be a win-win situation for both the employer and ATO when there is fewer inaccurate reporting of the payroll.
No need for payment summaries
In the past, companies had to generate payment summaries for their employees to check if everything is okay. That is no longer necessary when you have the STP system set up already. The ATO will automatically track the figures the company submits via the STP system. It then makes this information available online for the employees to access with ease. By using your myGov account, you can have access to all the information, including the super information and year-to-date tax details.
If the employer no longer needs to generate these summaries, then time and money are saved. Any company would welcome the idea of saving money and time. Click here for more information.
Easy access to employee information
Employers can now get all the important tax information about a new employee. Some might not always be forthcoming with their relevant information. However, the STP system ensures that all the important information is accessible by the employer. Using the myGov account, the ATO provides you with all the correct information you would want as an employer about an employee.
STP encourages digitization
For a long time, people have always been reluctant to change. The same goes for using accounting software to run businesses. With the introduction of the new STP system, it will force many companies to adopt new technology to help handle their monthly payrolls. As such, it leads to companies digitizing their records.
We all know that digitization is good for saving you time and helps in running the company efficiently. Also, this information is well-secured and stored. You can always access it whenever you want. Such is better, unlike when you had to use a file cabinet for storing such data.
Getting Your Business Single Touch Payroll Compliant
Now that you know more about the importance of using STP, you would want to know how to make the business compliant. Here are some of the steps to take to get your business STP compliant.
- The first thing you have to do is get an STP enabled payroll software. This is the software that will allow you to generate the relevant payroll information before submitting to the ATO. Always pick the recommended software to ensure it makes your work easier and generates accurate reports.
- Once you have your software access, set up the business account with all the employee information. You will have to categorize the employees based on what they do at the company. You should now notify the ATO with a phone call to get your account active.
At this point, the business is STP compliant. What remains is for you to submit the reports each time you pay the workers. It can be weekly, every two weeks, or monthly. Do not worry about submitting these reports as the STP software is intuitive. Just follow the onscreen instructions to submit the reports.
Eada Hudes is an Arts student whose experiences in life make her really tougher than anyone else. She can lend you expert tips on diverse topics ranging from relationship to fashion,technology, making money, health and so on. Her write-ups are a window into her thoughts and knowledge.