There is a significant amount of work required before an employee is handed his or her check at the end of the month. Payroll professionals are responsible for ensuring that the correct amount of tax has been withheld, any paycheck deductions or benefits are accurate, superannuation contributions have been made, and that all amounts are compliant with legislation and regulatory compliance.
It is therefore essential to have the right tools available to help you manage the process. Fortunately, advancements in technology have seen the development of a suite of intuitive business management software options now available on the market. Partnering with a reputable software provider not only protects you against the penalties of non-compliance but can also save you considerable time and money. Read on for our guide to perfecting your payroll processes.
Regulatory Compliance – Single Touch Payroll (STP)
The most important aspect of perfecting your payroll processes is ensuring that you are compliant with all regulatory requirements. For Australian business owners, the most significant development in regulatory compliance for payroll processing is Single Touch Payroll Australia.
STP is a new compliance regulation which modifies how small Australian businesses report their payroll information and activity to the Australian Taxation Office (ATO). STP reporting became mandatory for businesses with 20 or more employees on the 1st of July 2018. If you are a small business with 19 or fewer employees, STP reporting will become mandatory on the 1st of July 2019.
Understanding STP
STP differs from the traditional method of payroll reporting as it occurs on a pay-by-pay basis rather than once a year. To achieve pay-by-pay reporting, STP has been designed to work within your existing payroll or business management software. STP-enabled software streamlines and automates the reporting process while you run your usual payroll. After your payroll is complete the system will directly send the ATO the relevant information for each employee including their net pay, PAYG withholding and superannuation contribution for each pay cycle.
Streamlining the STP Process
The first step in streamlining the STP process is finding out whether your existing business management, accounting or payroll software is STP-enabled. If it is, you have an end-to-end solution and can simply run your payroll as normal whilst ensuring that STP reporting is activated.
If your existing software is not STP-enabled you have two options to ensure your compliance with the new regulatory requirements. First, you can choose a low-cost third-party sending service provider (SSP) to be integrated into your existing software. Second, you can choose an SSP provider to send your STP information outside of your software.
Online Accounting Software
Remaining up to date on all new regulatory provisions which affect your employee’s entitlements is difficult. Manually completing payroll processes leaves you liable to make significant errors including:
- Underpayment
- Non-compliance with correct Awards
- Incorrect PAYG withholding
- Inaccurate Employer Contributions including Superannuation
It is therefore essential to utilise online accounting software to perfect your payroll processes. Online accounting software updates every time there is a change in tax legislation and calculates employee entitlements based on the current regulatory percentages and figures. By engaging with advanced business management software, your business can minimise the risks associated with inaccurate payroll processing and decrease the costs of regulatory compliance.
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By utilising modern business management software, perfecting your payroll processes is a simple and easy task. With many low-cost software options available on the market to protect your business against the significant penalties of non-compliance, your organisation cannot afford to be without online accounting software.
