STP for advisors – 5 things to discuss with clients
Single Touch Payroll (STP) is here, but that doesn’t mean everyone in business has a firm understanding of the concept, or its ramifications for their business. This piece looks at STP for advisors and the key talking points they should raise with clients.
As an advisor to the business community, client awareness and education is a key way to engage, maintain and grow your customer base. And this is as true for STP as it is for BAS, TPAR or any number of other compliance-relevant acronyms.
You can set the STP scene with clients by educating them around the ‘what’ and the ‘why’ of the subject first, before moving on to the ‘how’ side of the equation. In doing so, you’ll have far better engagement, your client will be feeling less pressured about the imminent change and the whole experience will be generally easier and more enjoyable for all involved.
To assist you in structuring these conversations, here are the five things you absolutely must discuss when it comes to informing your clients about education for your client.
- What is STP?
- Why is the ATO introducing STP?
- How does STP work?
- How will the ATO and others use your STP data?
- What benefits will STP bring to you as an employer and a business owner?
STP is a new way of reporting your payroll information to the ATO.
Previously it was only your ‘total’ gross wages and PAYG withheld that was reported to the ATO at W1 and W2 respectively on your BAS and then each employee ‘totals’ were provided to the ATO at the end of the year when you prepared your annual payment summaries.
Under STP, you will be reporting your total payroll information and each employee’s payroll information each time you process your payroll. In addition to gross wages and PAYG withheld, you will also be reporting superannuation payable.
For employers with 19 or less employees, STP officially started on 1 July 2019.
The ATO recognise that accountants and bookkeepers will often be helping their clients transition to STP and have allowed us until 30 September 2019 to help make the tradition as smooth as possible for everyone.
There are three main reasons for the change:
- Create a more level playing field (Australia’s has an estimated black economy of $50 billion)
- Protect employees’ superannuation entitlements (there’s approximately $2.85 billion of unpaid employee superannuation guarantee)
- The ATO wants to interact with businesses in a more contemporary, digital way.
When you process your payroll, your STP-enabled software will send the following information straight to the ATO:
- Gross wages
- PAYG withheld from wages
- Superannuation payable for each employee
Then, when you pay your employees’ superannuation to their super funds, the super funds (excluding self-managed super funds) will report to the ATO:
- Date you made the payment
- Amount of superannuation you paid
The ATO will analyse and compare the information they receive from employers and employees’ super funds and will identify anomalies and make contact where necessary.
Specifically, the ATO will be able to see whether an employer has:
- Paid the correct amount
- Paid on time
- Not paid at all
The ATO will also be sharing information with various government departments.
Each pay, your employees’ myGov accounts will be updated and they will be able to see the following information for their year to date:
- Gross wages
- PAYG withheld from wages
- Superannuation payable
- Superannuation that you have paid to their superannuation fund
Over time, more government departments will be able to use your STP data for compliance and statistical purposes. Initially, the ATO will be sharing STP data with Centrelink, Human Services and Home Affairs.
STP is a game changer for employers and business owners and it really can help them achieve so much more business success.
I’ve listed a number of benefits below, and you might like to choose the top few that you believe will resonate with your client as you discuss STP with them.
- Opportunity to embrace accounting software (say goodbye to those shoeboxes, manual cashbooks and excel spreadsheet)
- Embrace software that is both STP-enabled and will help you run your business better (say goodbye to a separate system for quotes, invoices, chasing debtors, manually recording your income and expenses and filing your receipts as there is a solution that does this too)
- The opportunity to become more engaged with their numbers knowing that they are being transmitted to the ATO on a regular basis
- Access to real-time financial data and reports (think how handy this information would be on a daily, weekly and monthly basis!)
- Access your numbers anywhere, anytime (no longer are you tied to your home office computer to access your numbers as you can access on your phone or tablet)
- Empowering business owners to make more informed decisions
- Become an employer of choice (small businesses often miss out on attracting great employees as they are frightened that they may not get paid their employee entitlements but with STP this no longer goes undetected)
- No requirement to provide payment summaries at the end of the year
- Enhanced relationship with you as their advisor
- Less stress as their numbers are being kept up to date all the time instead of that last minute rush at BAS time
- Peace of mind that SG liabilities are paid on time
- Better work/life balance
After the initial groundwork is done and your client now understands STP and all that it involves, you’ll be ready to move onto the more practical, ‘next steps’ part of your consultation. It’s at this point that you might offer an STP software recommendation, as well as insight on how they might go about implementing the solution, and any associated costs.
Chances are your client will be so primed to take on STP that they’ll give you the go ahead on the spot. And that leaves you to hand them over to your practice’s STP Champion for implementation, training and their first STP transmission.
Amanda Gascoigne is an industry expert in STP and has worked closely with the ATO since its inception. Amanda offers a number of workshops and training for bookkeepers, accountants and small businesses on STP. For more information visit her website.