Are you Single Touch Payroll ready? Probably not – a recent poll conducted by Accountants Daily found that less than 10% of accountants’ clients are ready for the shift to STP. The dead line for STP is July 01 2018, but here are five reasons why you should act now on STP implementation.
1. Threat or opportunity?
STP takes effect on 1 July 2018 and compliance is mandatory for those with 20 or more staff. It is a ticking time bomb. Medium businesses are impacted the most – those with $2m to $100m in revenue. But if you get in early, STP presents a golden opportunity to undertake a proper business review and upgrade or replace your solution with software that improves other areas of your business at the same time.
2. Every payroll package must be upgraded or replaced
STP reporting involves payroll information being sent electronically to the ATO at the end of every pay run. It is this direct connection to the ATO that makes this no simple software update. My estimate is that over 60% of the payroll packages in use today will need to be replaced.
3. UK employers wished they had more time
The UK moved all employers to a similar model four years ago. I think the ATO approach is much better. By initially limiting STP to businesses with 20 or more staff it reduces the impact from 800,000 employers down to 100,000, accounting for about two thirds of all employees between them. Also, the payroll data that is sent to the ATO is ‘year-to-date’ (rather than just for that pay period) so it’s easier to correct if initial issues occur. About 10% of the 100,000 are large employers who are typically aware of their obligations. But it’s the medium businesses I’m worried about. The overwhelming regret from UK businesses was they left it too late – most wished they had more time.
4. Small employers are likely to also opt in
And there is a twist. The number of businesses with less than 20 staff who decide to opt in to STP I believe will be high, creating even more urgency for medium businesses to act now. The 100,000 businesses moving to STP could double or triple. The smaller businesses will see the benefits that STP brings, like streamlined reporting and online forms. And for some it will avoid them upgrading in two steps – once before 30 June 2018 to access the new payment summary v12 and tax file declarations v3.0 and then again for STP when it’s extended to all employers from 1 July 2019.
5. Avoid a panic decision that impacts your business
Closer to 1 July 2018 we’ll see panic decisions to replace old multi-user software suites. We saw it with the introduction of GST and we’ll see it again with STP. For many, the functionality on their accounting side will go backwards or be vastly inferior to what they could have gotten. If your revenue is under $2 million you probably suit a small cloud system, but over 70% of medium and large businesses have or are moving to hybrid systems – in-house software with embedded cloud applications, i.e. the best of both worlds. It’s the medium businesses with 10+ staff I am most worried about, especially those with stock and debtors (like wholesalers, distributors, manufacturers). These are the ones who have the most to lose or gain.
Where can I get some STP guidance?
Attaché has developed a free video brochure to help you review your options whether you are a payroll manager or advisor. It targets medium businesses employing 10 or more staff, with stock and debtors (e.g. wholesalers, distributors, manufacturers) as well as businesses with 20 or more staff in areas like aged care or with industry or ERP software. Visit attachesoftware.com/single-touch-payroll or call 1300 288 224 for more information. You can also visit the ATO’s STP information portal.
You can also reach out to us at CR&T, with our dedicated team of Australian Payroll Association accredited advisers.