On 1 July 2019, legislation ticks over that extends Single Touch Payroll (STP) requirements to businesses with 19 or fewer employees. STP will change how and when businesses report payroll to the Australian Tax Office (ATO) after each pay run. While the name lends itself to being a simple change, it actually signals a huge opportunity for micro businesses.
Why this is huge news for small business
Let’s face it, those businesses who already use a comprehensive cloud-based business management solution that encompasses payroll & accounting won’t see a major change, except in the way they report their data to the ATO.
The real winners here are the micro businesses. Yes, you read right; STP could just be the best thing to happen to Australia’s micro business economy. For too long they’ve floated under the radar when it comes to business management systems, leaning on the likes of Excel spreadsheets and bank statements to manage their business. Now, STP is heralding a significant opportunity for change for micro businesses, and it’s one they’ll be silly to ignore.
To understand why, let’s take a look at the status quo for many micro business owners: For most, invoicing is done on a standalone invoicing app, or in a Word document. A profit and loss is something they may get access to six to 12 months after financial year end, and, for them, bookkeeping means extracting the figures off a bank statement and submitting a BAS, just in the nick of time.
Flexibility and support in the palm of your hands
Recent research from Intuit Australia revealed 30 per cent of respondents indicated they are ‘concerned about the prospect of STP compliance, and a quarter are ‘anxious’.
I must remind all micro-business owners: you are not alone in this.
John Shepherd, Assistant Commissioner and STP Program Lead at the ATO recently told me, “There are some in the micro employer group who will find STP reporting a real challenge and that is why the ATO has come up with a range of flexible options. The effort will be worth it, to streamline payroll reporting over time and ensure a level playing field for all businesses.”
There is a wide array of expertise and support you can tap into to make your STP transition as smooth as possible. Small business owners should not feel that the burden is all on them. The ATO website has a wide array of helpful content, and your bookkeeper or accountant will be able to guide you on the steps you need to take.
It’s time for small business to think big
“Because they operate small, their tendency is to think small”. This mindset holds micro businesses back from investing in systems or processes that could really drive their business forward. Be honest: is that Excel spreadsheet really serving up the insight you need to support growth?
Running a small business is time consuming enough, so instead of losing valuable hours on manual systems, investing in an automated platform such as QuickBooks will bring far greater benefits than just compliance with STP. With a real time view of what’s happening in your business and greater insight into what’s ahead, it’s easier to make the changes you need before it’s too late.
After all, stronger visibility around your cashflow is more important than ever with STP. Reporting your year-to-date superannuation and PAYG figures after each pay event creates a liability with the ATO. Turning a blind eye to super payments is also no longer an option. All this means that having a clear grasp on your cashflow is going to be more crucial than ever.
Lielette Calleja, Owner, All That Counts