One of the biggest changes in the way taxation and paydays are handled was via the Single Touch Payroll Software. Initially, it started with a unified government law passed by the Australian government to ensure that all businesses that have more than 20 employees are using this and are directly linked with the ATO (Australian Taxation Office). It is an initiative by the government to streamline all salaries and payment related activities to be centrally channeled.
It reduces the overhead of going through the entire process during payday. And also, a separate reporting system to inform government authorities can be avoided by adopting the Single Touch Payroll software. It converges growing digital capacity as a government and to also keep an eye on the regulatory approaches effectively.
Let us go through some of the essential points mentioned regarding Single Touch Payroll software:
- Employers can inform regarding their PAYG Withholding status automatically with the Taxation office at the same time as their payroll cycle using any Standard Business Reporting Software
- Superannuation contributions are also informed at the Taxation Office when payments are done to their funds
- Employers need not feel the pressure of taxes getting cleared. They can have the option to PAYG withholding at the same time that they pay their staff.
- A streamlined process can be introduced for employees who are just starting with their employment. They can complete their Tax File Number declaration via the Government online portal. They can also complete this procedure via the payroll software or HR software used by the employer.
Benefits of the Single Touch Payroll Software
The entire process is streamlined and has its benefits. Let us look at some of the benefits that have been part of the Single Touch Payroll software:
On a high level:
- Easy streamlining of the entire legal and government policies where the employers can hold with PAYG withholding payment and automating the payroll process
- The entire payment summary process has been improved just like the business performance management software
- As part of the joining formalities, the employees can fill their entire details online which will be part of the reliable database for employers
- An easy process when it comes to paying taxes and Super
Let us look at some of the benefits in details of having a Single Touch Payroll Software:
- Small businesses start having the practice of keeping efficient bookkeeping habits and thereby managing finances in an orderly fashion
- Taxation Office gets easy reports and the information and data on the companies and the employers regarding their payroll records. The software is also efficient in performing simple calculations
- Companies effectively do not have to give payment summaries to their employees as the entire record of work is being shared with the Taxation Offices
- It will be easier to view a company’s PAYG withholding and superposition in a more progressive way throughout the year and the same will be easily viewable via the government portals or the company’s business process management tool
- Since all the information and key values will be pre-filled in the BAS, companies do not have to go through the hassle of doing that manually. The information of PAYG withholding will be automatically filled in the BAS-2 too.
- The biggest benefit is facilitating the regular pay cycle and reporting of wages, PAYG withholding, and super. The business owners also get the flexibility of when they can choose to PAYG withholding and Super payments.
- Other modules of the Single Touch Payment Software will ensure that they work seamlessly, efficiently, and with the error-free mode of registering TFN declaration and Super choice forms that are made available online. This ensures that all taxation woes are dealt with ease and simplicity.
Single Touch Payroll software is also made in such a way that any modifications in the future are easily dealt with. Apart from easing the burdens of taxations and the related paperwork, if the employers have to take care of certain additional expenses in the future like payroll tax or child care benefits, these are easily done via the software and are handled in the system itself.
Due to the single streamlined process, the governments can keep an eye on the employers to ensure that they are taking care of their payments and obligations and also employees to ensure they are not into overpayments or fraud. Everything becomes clean and out in the open for the governments to decide regarding any company’s financial condition.
Who needs single touch payroll software, and why?
The answer is simple – everyone. All the companies are maintaining their financial transactions in one way or the other. And it is important that as employers, you are aware of the implications of not having the benefits of such easy software.
Let us have a look at the obvious three kinds of organizations and why they need this:
Businesses Using Cloud Accounting Software
For businesses that are using cloud accounting software, this is not at all a complicated step to the work they are doing. It is a straightforward extension to the business process management software that you are using. As a company, whatever process that you follow, you continue to do with only the difference that you have to lodge your data at the end of the payroll process.
And therefore, it becomes imperative that you keep the data as much accurate as possible. The Single Touch Payroll software is a reminder that you need to keep it intact to get any relevant rewards, avoid any penalties, leave loadings, etc. This will be handled by your software, and in case of any doubt, you can always verify this with an accountant or a bookkeeper.
Businesses Using Standalone Desktop Accounting Software
Things would look forward to upgrading from the obsolete desktop accounting software. Since they cannot be connected with the taxation offices and anything needs to be handled automatically, upgrading to a cloud-based system makes things easier.
Standalone desktop accounting software might not be well-equipped to any such upgrades, and connecting them to the internet might not be sufficient enough. It is advisable that the systems be updated to the latest smart and SaaS software so that all the taxation related work and data will not only be accurate but also, the data can be synced with the government records. You don’t have to make any manual entries, and most of your bookkeeping activities are taken care of efficiently.
Businesses That Are Still Not Using an Accounting Software
For a small business with a 1-4 person, it might seem like an unnecessary addition to the whole work. However, it is important that as a business, you might as well use an accounting system and upgrade yourself from the mundane manual work. Eventually, you might be required to upgrade as you increase the number of the employees, and as a business, you are slowly growing into an organization.
The rules came as a finite directive from the Taxation Office and all the companies that are running with employees and payroll systems must have the Single Touch Payroll software. For systems that are not doing this, the upgrade is mandatory. In a way, as a business, you will be saving a lot on the accounting software that you might have to purchase later on or when you add more employees to the business.
Indeed, as a business, you shall not be needing to be convinced of getting a system to work for you. Most of the new software available in the market takes care of the entire taxation system, billing system, and payroll system, and there are amazing features like automation, reporting that is not only efficient but also time-saving. You will be able to focus better on the business with all your payroll and taxation woes being handled by the software.
Since the basic idea behind the entire Single Touch Payroll software is to ensure that there are no frauds or hidden payments concerning any business and that it doesn’t impact the economy at all, the government initially started with simple portal development and based on that the entire STP system was made. It is also considered as real-time reporting because as the payment is made and the data is updated, the Taxation Office is aware of the information.
Also, since all information is updated on time and taxation related work is automated, the businesses do not have to worry regarding the paperwork. Everything is handled in the software itself, and in case of large corporations that are managing their work via accounting software, all they need is just an extension of their management software. It is simple to integrate with the existing payroll software and the HR software that are interlinked with each other.
The law was passed by the Australian Government to be implemented from July 2019. And initially, it was for organizations with a larger number of employees. However, now it has been uniformly implemented for all sized businesses.