With the introduction of Single Touch Payroll (STP) only weeks away, hundreds of thousands of small businesses are still yet to make the switch to the real-time reporting system. In fact, according to a YouGov galaxy survey of 517 micro-business owners in April found 70% had no idea what STP is.
Although the current STP rules require medium and large enterprises to send super and income tax information to the ATO, small businesses, with fewer than 20 people, will now need to implement the new process.
These changes were expected to affect more than 750,000 small and micro-businesses in the lead up to the July 1 deadline.
For many businesses, this requires purchasing additional software or enabling the payroll component of their current accounting software to ensure they’re compliant.
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But more than a third of small businesses in Australia admitted to not currently using any accounting and payroll software, according to the In the Zone research conducted by accounting software provider Reckon.
The same survey revealed the administration and ‘red tape’ of running a business was ‘killing the dream’ for almost 50% of survey respondents. But will these new ATO requirements dishearten business owners further?
Fortunately, using an ATO-certified accounting application means small business owners can manage STP reports from their smartphones – simplifying the process and cutting through all the red tape.
STP is expected to have a number of benefits, including increasing efficiency within the tax system for businesses and the ATO and ideally making black economy activity harder.
But the cost of implementing new software is yet another barrier for small and microbusinesses.
Reckon chief executive Sam Allert says many microbusiness – businesses with between one and four employees – are still doing ‘shoebox accounting’ and might be overlooking payroll software that might save them time and money.
“This might be because they’re reluctant to digitise their operations due to limited capabilities, internet access, or cost,” Allert says. “Small business owners have enough to worry about without the distraction of admin and red tape.”
The fact these businesses are struggling with the weight of administration, highlights the opportunity to adopt technology advances to streamline their admin, Allert says.
Successful Endeavours managing director Ray Keefe doesn’t believe the ATO has done enough with regards to educating small businesses about the requirements, saying they had been informed by the ATO only after their accountants had already informed them.
“It makes sense to harmonise systems,” Keefe says. “With the recent discussions about employees not paid according to the minimum wage and businesses not paying superannuation a system that makes everything happen at the same time should ultimately make doing business easier and with more confidence.”
But Keefe’s chief concern with the rollout is a lack of understanding about what they need to know and what to do if they realise a mistake has been made.
“By giving customers a smartphone-based option, with an easy to use design, we’re improving the accessibility of ATO-compliant STP software,” Allert says, to hopefully combat any barriers small businesses face.
The ATO is still working out what STP reporting deferrals and exemptions it will offer, but as the soft deadline is fast approaching, small business owners can expect to hear more from the ATO in the coming weeks about what’s expected of them.
At Reckon we are more than just accounting software, we aim to help small businesses build the foundation to grow and succeed – easy and affordable compliance is an essential part of this.