Yahoo Finance Changes to payroll reporting rules are rolling in 1 July, but over half of small businesses are in the dark
Most Australian employees will be unaware that the rules around how their boss prepares and reports payroll activity to the tax man will change within weeks.
A new way of reporting tax and super information to the ATO, called single touch payroll (STP), will become mandatory on 1 July.
And though the changes are less than a month away, more than half (55 per cent) of small businesses surveyed by Xero said they didn’t know what STP was.
Yet two in three (66 per cent) of small business owners agree that technology gives them a competitive edge.
What exactly do small businesses need to know about single touch payroll?
Where businesses typically report payroll activity just once a year, they’ll be required to do so after each pay day in a digital format and using a specific format called Standard Business Reporting (SBR).
Since businesses will be reporting to the ATO after every pay day, it means the employment payment summaries and payment summary annual reports that small businesses would typically finalise at the end of the financial year will be history.
Reporting will be done completely online, so there’ll be no more need for paper forms. It means small business owners will have to use software that provides STP or find a service provider who can produce the proper reports.
Employers of 20 or more staff should already be reporting through STP, while smaller businesses with 19 or less employees will have to report through STP from 1 July 2019.
‘Micro’ businesses, with only one to four employees, have a number of alternative options available, as stated on the ATO website.
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Small business owners too busy to keep up with changes
Xero Australia head of industry Matthew Prouse said small business owners were “run off their feet” and “often don’t have the bandwidth to stay on top of all of the new technologies”.
“There is a tension between small business owners being positive about the potential of technology and the barriers to adoption that stops them moving ahead,” he said.
“It’s a classic change management situation where we need to connect the need for change to a clear benefit they can achieve. This is particularly crucial in relation to boosting the uptake of STP.”
Advisors should work with small businesses to help them understand that adopting STP will help their business in terms of efficiency, time-saving and accuracy, he added.
5 expert tips on how small business owners can adopt STP
According to Xero change manager Eve McKenzie, here’s what business owners can do to introduce single touch payroll to their staff as painlessly as possible:
1. Keep it simple
Paint a clear picture of the changes that the team is heading towards, McKenzie advised.
“Simplify the project you’re about to introduce and break it down into ‘bite-
sized chunks’ of achievable milestones.”
2. Relate to them and anticipate their concerns
“Consider what is important for your staff and how they will benefit from the change.
“Connect the reason for the change occurring to something you know is going to be appealing to them and that will stimulate their desire to want to change.”
So, for example, if the current way of reporting payroll activity takes forever, help them see that the process will become simpler, easier and quicker.
3. Make sure there’s an owner
Have someone in charge of the project of transitioning onto STP to ensure a smooth process.
“Not only does this help speed up the journey, it’s less uncomfortable staff if the change is structured, controlled and clear updates are provided to the impacted people.”
4. Prepare staff for change
“People are the common denominator of any change,” McKenzie stated.
Either they’re impacted by the change, playing a role in implementing the change, or both – so business owners should ensure they’re to carefully considered and protected throughout the change period.
“Think about what they need to have, or need to be able to do, in order to be successful in the new state.”
5. Make way for some disruption
Understandably, employees will take some time to adjust to the new system – so the best thing you can do is to anticipate any kinks that might come up in this process.
“Try to avoid distractions or burn out,” McKenzie added. “Be realistic about your business operations and outputs during that time.
“If you can spend the time and energy integrating the change thoroughly, it will become operationalised much quicker and more efficiently.”
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