By now most people have heard of Single Touch Payroll (STP). If not, it’s a relatively new process that requires businesses to report employee earnings and superannuation to the Australian Tax Office (ATO) each pay period via an online report. This has been rolled out progressively since 1 July 2018 for large businesses, and 1 July 2019 for smaller businesses. There is however another group that haven’t yet been addressed; micro businesses.

According to the ATO Micro businesses, with one to four employees, that don’t currently use payroll software, may be eligible to apply for a concessional quarterly reporting system instead of the weekly/fortnightly reporting STP now used by all other businesses.

Eligibility for concessional quarterly reporting

To be eligible you must:

• Have between one and four employees on the day of application. This means any type of employee: full-time, part-time, casual, and any employees on paid or unpaid leave.
• Lodge your activity statements electronically through a registered tax or Business Activity Statements (BAS) agent.
• Have non-computerised payroll – this could include running your payroll manually and keeping records on a spreadsheet or paper.

Low cost STP reporting options

The ATO has compiled a list of companies that offer low cost systems for STP reporting.

After working through the list, the only free option found for micro business comes from a company call Reakon. It’s a smartphone application, more commonly known as an ‘app’ and it’s designed to simply report STP to the ATO, and it has ATO approval. They also have cheap systems for businesses of any size. For $5 a month, it allows you to do all your payroll and for $10 a month you can do payroll and basic accounting.

Companies such as MYOB and Xero have $10 a month payroll systems for micro businesses and QuickBooks has one that starts at $15 per month. They all do more than just STP. Most have a cheaper introductory offer for a few months.

The bottom line

If you are a micro business that doesn’t currently use payroll software, the ATO will give you more time to transition over to the STP system. However, you’ll need to fulfil the criteria and you’ll need to use a BAS or tax agent to lodge your quarterly BAS. So if you already use a payroll software or if you lodge your BAS yourself then you will need to transition to STP sooner rather than later.

The ATO disclaimer (which also applies to Advance Cessnock City) – if you wish to purchase software listed on this page, you should do so on the basis of independent consideration or advice.

Disclaimer: Neither Advance Cessnock City nor Cessnock City Council has any financial relationship with the products in this article, nor receives any benefit actual or in-kind from them. This is an information service that may benefit small business owners in the Cessnock Local Government Area.

If you have found a product or service that may have a wide appeal to our small business owners’ email us on economic.development@cessnock.nsw.gov.au and we may use it for the basis of a future article.