When people think about opening their own business, their minds tend to linger on a couple of things:
- The freedom to be their own boss
- How much money they’ll bring in
- The potential for future growth
What prospective business owners don’t realise is that small business owners are some of the hardest-working people around – according to some surveys, more than 1-in-4 small business owners regularly work 50+ hour weeks.
Much of this time is spent not managing operations or planning out your growth strategy with a financial advisor or business accountant, but rather, performing clerical work like looking after payroll.
It’s vital work, to be sure – however, it’s also arguably the most time-consuming.
Luckily for you, single-touch payroll offers a solution.
On the verge of opening your own business? Our business accountant in Melbourne explains single-touch payroll, and why your new business needs it!
What is single-touch payroll?
As we mentioned above, small business owners are some of the hardest-working people around – and consequently, some of the most time-poor, too!
Single-touch payroll (STP for short) is a new system, implemented by the ATO to make running a business just that little bit easier.
Essentially, STP automates large parts of your payroll reporting.
Instead of having to manually record, report and send out information about pay runs to the ATO or your small business accountants, all this information is automatically forwarded to the tax office.
Each time you do a pay run, your bookkeeping or accounting software will “talk” to the ATO’s database, filling them in on crucial information such as:
- PAYG tax
- Superannuation contributions
- Salaries and wages
Come tax time, you won’t have to do any extra work.
With all the information compiled over the financial year via single touch payroll already on file, the ATO will automatically incorporate this into your tax return.
The benefits of single-touch payroll
Any small business owner that has ever attempted their own accounting or bookkeeping knows that doing payroll manually is anything but fast.
Filling out spreadsheets, tallying up PAYG withheld, calculating superannuation contributions…
All of this can be time-consuming, especially if you’re still doing all of it by hand.
Thanks to the automated nature of STP however, you will be able to save a considerable amount of time – time you can now cash in elsewhere in your business!
You’ve gone over all your calculations. Everything has been double-checked. You’ve run the numbers by one of your other team members.
Yet despite all that, a mistake still manages to slip through.
Not all of us have a mind for numbers. There’s nothing wrong with that – however, it does mean that manual bookkeeping can often result in costly errors and mistakes.
Processes such as single touch payroll almost completely remove the human element, minimising the likelihood of an error and ensuring that everything payroll related is 100% accurate.
If you aren’t using digital payroll solutions, we strongly recommend getting started now!
What’s more, both you and your employees will be able to check income tax and superannuation contributions in real-time using MyGov.
Better yet, they won’t have to wait for you to send out a payment summary, saving time for both of you.
And all of this thanks to single touch payroll.
This is because single touch payroll updates all of this information automatically, and in real-time too.
Each time you do a pay run, the ATO is “looped in”, and your account automatically updated.
It’s convenient, sure… but do I NEED single touch payroll?
There’s no way out of STP!
As of July 2019 (the beginning of the new tax year), STP will be mandatory for every employer, regardless of size.
While previously STP was only mandatory for larger businesses, starting the next financial year, even microbusinesses with only a couple of staff will be required to use STP.
Luckily for you, making the transition to STP is relatively easy, as the vast majority of bookkeeping and accounting packages offer STP support.
If you’re unsure whether your current accounting system supports STP, you can consult with this list compiled by the ATO.
Many of the options on the list also offer affordable or entry-level packages, putting STP within reach of even small businesses with only one or two other employees.
Get your affairs in order this tax season with our business accountant in Melbourne!
Talk to Edmunds about implementing single touch payroll in your business
At Bruce Edmunds & Associates, our mission is simple: to make your tax affairs as simple as possible.
This is especially important, as, tax time is upon us.
As any business owner will tell you, tax is one of the most stressful times of the year.
Whether it’s by setting you up with single touch payroll systems that make pay runs effortless, looking after all of your accounting, or succession planning, our team of small business accountants work hard to provide you with security and peace-of-mind.
With our team on your side, you’ll be able to go to bed at night knowing that your finances and tax obligations are accurate, timely, and effortless.
Searching for a reliable business accountant in Melbourne this tax season?
Give Edmunds a call today on (03) 9589 5488, or click here to send an enquiry.