Single Touch Payroll: a catalyst for positive change

payroll, STP
Close up blue button laptop keyboard selective focus on word PAYROLL. Human resources, salary, accounting, financial and business administration concepts.

Australia’s culture is multi-faceted. There’s our love for sport, our belief that everybody should have a fair go, our laid-back attitude, and our diverse range of cultures.

Another defining feature is our passion and admiration for small businesses. Some of our most notable companies, such as Woolworths and Boost Juice, started out as small businesses. The small business sector is a crucial part of Australia’s identity, with around 4.8 million people working for small businesses in Australia, equating to close to 44 per cent employment of our workforce.

Defining moments have significantly altered the sector, such as the uptake and usage of smartphones, the popularisation of gig-economy apps such as Airtasker and the rapid rise of tech start-ups.  The next big shift set to catapult small businesses into a new era will be Single Touch Payroll (STP). Here’s why:

A smarter way to manage finances with fewer headaches

For many small-business owners, working on their business is what they love to do. With the rise of the gig economy and the surge in e-commerce, it’s never been easier to set up a new business.

The downside: managing finances.

Most entrepreneurs don’t start their own business because they love spending time on the books, logging hours and tax receipts, and preparing business activity statements. And when small businesses lose sight of their finances, they can make mistakes that can cost time, money, or even their survival.

STP opens the doors for small businesses to digitise their financial management, because from 1 July this year they will be expected to send their tax and super information to the ATO at the time of each pay run.

Employers who chose to do this via cloud accounting software can drive greater efficiency, standardise processes, reduce errors and enable more proactive tracking of their business’s financial position. Another benefit is that they will gain real visibility and control over their data, while saving time preparing and submitting information to the ATO.

STP can be viewed as the catalyst to positively transform the efficiency and success of the small business sector as a whole.

Country-wide digitisation

For inspiration, we only have to look at our friends over in the UK, who are going through a very similar transition with their Making Tax Digital (MTD) campaign. It encourages all UK small businesses to become digital and throw away manual accounting methods for good.

The expected efficiencies and benefits to the entire UK small business community and the wider economy are forecast to be tremendous. A report by Volterra Partners and Intuit QuickBooks revealed small and medium-sized enterprises could make annual gains of £6.9bn (around AUD$12.9bn) as a result of MTD.

The amount of savings small businesses in Australia will collectively save after the STP campaign is completed is yet to be completely calculated. However, there’s no doubt there will be substantial efficiencies and boosts in productivity, continuing to grow in the years to come.

Preparation is key

Despite these positive forecasts, awareness, preparation, and integration are key to meeting the 1 July deadline and making the most of the STP opportunity. Such large-scale digitalisation is a daunting prospect and many small businesses are feeling confused about what to do next. It’s important small business employers speak to their trusted accountants or bookkeepers about the steps they need to become compliant.

STP is much more than a simple upgrade to small businesses’ relationship with the ATO. It marks a major shift in the way all Aussie owners manage their finances, a chance to say goodbye to tedious manual processes, and an opportunity to spend more time focusing on what matters.

John Dunkerley, Country Manager, Intuit Australia