As of the 1st of July 2018, Single Touch Payroll or STP software has become mandatory for larger businesses in Australia; smaller businesses have slowly been urged to comply with each passing year. A system which automates payroll documentation, Single Touch Payroll takes the hassle out of reporting your employee payroll details to the Australian Tax Office. Ultimately the burden of your annual reports is eased, which is just one of the benefits of Single Touch Payroll. To satisfy this new legislation, companies need to invest in STP software that is ATO compliant.
How STP Works
Single Touch Payroll is cloud-based software which is either integrated into your existing payroll system, or it is standalone software. This system automatically sends your payroll data to the Australian Tax Office as you compile and send it out to your employees with every pay cycle. Your payroll information is updated with every pay cycle regardless of when and how often you choose to pay your employees. To become Single Touch Payroll compliant, you would need to purchase and install STP software that is certified by the ATO. For a smooth transition, you want to ensure that your accounting and payroll system is STP compatible.
The Benefits of Single Touch Payroll for Employers
The thought of a shift in your monthly payroll routine may sound daunting, but in truth, once you are used to it, you quickly realise there are no cons. Moreover, STP is automated, so there’s no extra work. For employers, annual tax reports are cumbersome and time-consuming at best. But when you have a sound system in place, it is far easier to keep up with.
How employers benefit from STP:
- A good STP system streamlines your reporting process
- Ensures all your payroll data is up to date
- Automatically sends out salary, tax, PAYG, superannuation and other essential information to the Australian Tax Office
- Simplifies annual tax reporting by sending an employee income statement previously referred to as payment summaries and group certificates to the ATO
- All the information enables the ATO to pre-fill PAYG sections of BAS
- Reduces unnecessary and duplicate reporting to ATO
- Minimises mistakes
- Ensures your business is tax compliant
The Benefits of Single Touch Payroll for Employees
Switching to Single Touch Payroll also makes life easier for employees. Salaries are paid no differently, but annual tax reporting is more manageable.
How employees benefit from STP:
- Employees will have instant access to all essential payroll information such as salary, tax, PAYG, superannuation, etc.
- All information is available on the myGov website
- Payroll information is updated on the myGov website with each pay cycle
- Employees no longer have to wait until the end of the financial year to review their tax data
- STP ensures employees are tax compliant
The best Single Touch Payroll software offers a system that combines business accounting software and payroll software. Tencia has been designed to organise and assist businesses with their foreign currency, sales analysis, reporting, creditors, debtors, sales, and Single Touch Payroll, amongst many other functions. With the changes in legislation and the mandatory adoption of STP by the Australian Tax Office, businesses cannot afford to wait until the mood strikes them to deploy an STP system. To avoid penalties and remain tax compliant, find out about Tencia.