payroll

Single Touch Payroll changes 2022

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There have been changes to Single Touch Payroll (STP)

Employers are required to report additional payroll information now or once your payroll product is ready.

You need to start reporting additional information on or before each pay day — this is known as STP Phase 2.

STP Phase 2 started on 1 January 2022

Some Digital Service Providers (DSPs) need more time to update their payroll software products and transition users. If your DSP has a deferral, this covers you.

It’s important you understand which of the following circumstances apply to you:

  • Your payroll product is ready — it’s time for you to start STP Phase 2 reporting now or have a plan in place to transition as soon as possible
  • You are covered by a DSP deferral — know when your product will be ready and that you are ready to start Phase 2 reporting when it has been updated, or no later than the first payday after your DSP deferral expires:
    • Xero 31/12/2022
  • Your payroll product is not being updated to offer STP Phase 2 reporting — your DSP will let you know if they have another product you can use. If not, you’ll need to choose a product that offers STP Phase 2 reporting.

If you’re unsure as to which of these circumstances applies to you, speak with your provider or your BAS professional.

What you need to do

Many DSPs are releasing changes progressively. Your DSP will provide you with instructions so it’s essential that you follow them.

The ATO has compiled some resources to help business owners to understand the changes and prepare. These include a factsheet, checklist and detailed reporting guidelines which outline the STP Phase 2 reporting requirements. These can be accessed at ato.gov.au/STPresources.

The additional STP information is intended to help Services Australia customers, who may be your employees, get the right payment. It will also reduce the need for you to provide information about your employees to multiple government agencies.

Need extra time to transition?

You can apply for a delayed transition if you need more time to start STP Phase 2 reporting. Visit ato.gov.au/delayedstp2transitions to find out how to apply.

Source: ATO

Complete tasks for your tax period

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As a small business owner, you want to do what you love

However, managing your accounts might not be what you got into business for.

Use your time wisely to help give you the space to start analysing how your business is tracking and really focus on the growth opportunities available.

Completing financial tasks regularly will give you the ‘creative/thinking space’ to focus not only on growing your business but also take time away from your business to enjoy a holiday.

Are you registered for GST?

One way to set regular timeframes is if you report GST or Goods and Services Tax to the ATO.

GST is reported via a business activity statement or BAS, monthly, quarterly or annually. Use your GST period as your time frame to work towards.

Check with the ATO or speak to your bookkeeper to see if you need to report GST.

Not registered for GST?

You can still set regular time frames for your business to work towards and keep yourself accountable for.

TIP! A great period to work towards is quarterly, so you can start to compare business performance from one quarter to the next.

Tasks

Complete the following day-to-day tasks for each time frame

  • Record all sales
  • Record all expenses, such as bills, wages and other business expenses
  • Reconcile your bank accounts regularly
  • Keep business documents stored within the file library in Xero
  • Keep your payroll and superannuation up to date

What should you be doing at the end of each period?

Reports

Reports that help with comparing periods include:

  • The Profit and loss report: to show your income and expenses for current and past periods
  • The Balance sheet: to understand the financial position of your business

Also start to prepare or chat to your bookkeeper about preparing budgets for your business.

Check out what reporting tools are available in Xero, and how they can help you to track and manage your cash flow more effectively.

Having this knowledge is going to empower you to start making business growth decisions and have more meaningful conversations with your accountant or bookkeeper the next time you talk.

Setting yourself up for the new year

Financial year-end is the perfect time to do a check-up, celebrate your successes, and refocus on business goals.

For more Xero tips, advice and bookkeeping essentials for your business, visit How We Help You and get started today with Notch Above Bookkeeping, Australia-wide.

Source: Xero