Another financial year, another article talking about the benefits of single touch payroll.
Take our word for it however: there’s a very good reason we’re retreading this topic again.
Single touch payroll is a huge help when it comes to your tax reporting. And with another financial year behind us, what better time than now to reiterate the power of single touch payroll (STP)?
Our small business accountants in Melbourne are big fans of STP – and once we’re done explaining it, we’ll bet that you’ll be as well!
Our small business accountants in Melbourne explain single touch payroll
Since July 2019, single touch payroll has been mandatory for all businesses big and small going forward.
Most small businesses out there are already on single touch payroll, and already know how it operates as well as how it benefits them.
This article isn’t for them – rather, it’s for individuals who are in the process of starting their own businesses, or new businesses that are still trying to get off the ground.
With all the work that goes into setting up a new business, it’s little surprise that some things can slip through the cracks.
Unfortunately, in some instances this can include things that can make your business accounting considerably easier, like STP.
How it all works
Under the old system, it was the responsibility of business owners to prepare and send payment summaries to the ATO.
These summaries were crucial, giving the ATO insight into:
- Salaries and wages
- Superannuation contributions
- PAYG tax
Using this information, the ATO would calculate your business’ tax obligations, as well as income tax for each of your employees.
What STP does is essentially take all of this information and automate it.
No more need to spend hours entering data or compiling pay information – STP-enabled payroll software automatically compiles all the relevant information and sends it off to the ATO without you having to do so much as lift a finger.
How STP makes filing your business tax return easier
Filing your taxes return can be a lot of work – filing a business tax return is even harder.
Businesses have to contend with many more taxes, exemptions, and allowances in a single financial year than many individuals will in their entire lives.
It’s an awful lot of work, especially for a small business owner.
But thanks to STP, it’s now significantly easier.
Time is money
And in the past, the old system would result in far too much of that precious time going to waste.
Data entry is boring. Worse, it’s also a huge time-sink – not a great combo during tax time, a period when business owners like you already have a ton of extra work to do.
By automating one of the most tedious parts of your small business tax return, STP allows you to redirect your attention to more important considerations in your small business taxes.
On top of automating the payroll reporting process, STP transfers all of this information to the ATO the moment you make a pay run.
Using this information, the ATO automatically updates your information on MyGov, allowing you to see everything in real-time.
In addition to providing real-time insights however, this also allows the ATO to automatically calculate payroll-related tax information for your business tax return, which can turn parts of your tax return into a simple “copy-paste” task.
One of the biggest issues with manual data entry? Mistakes.
Whether it’s typographical errors or miscalculations, mistakes are all-too-common when doing your own accounting and bookkeeping.
Thankfully, it’s no longer something you need to worry about with STP!
STP ensures that all the information relating to payroll in your business tax return is accurate, eliminating mistakes and protecting you from a fine, penalty or unexpected phone call from the ATO.
Talk to a tax accountant in Melbourne today
Single touch payroll: three words that have made waves in the accounting and small business worlds over the last couple of years.
Since this system came into effect, it’s made small business accounting much easier than it used to be.
Whether you’re only just opening your business and need help laying the financial groundwork, or want to bring your payroll into the 21st century with STP, our tax accountants in Melbourne can help.
From working STP into your accounting, to helping chart a path out of your financial situation, to completely taking your small business accounting off your hands, find out how our team can help your business thrive.