The July 1 milestone every small business needs to know

The ATO has rolled out the new mandatory Single Touch Payroll (STP) but many small business owners don’t even know what it is.

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The ATO has rolled out the new mandatory Single Touch Payroll (STP) but many small business owners don’t even know what it is.

Single touch payroll (STP) legislation has passed, meaning businesses of all sizes are required to submit payroll data every pay run as of July 1 this year. The change means businesses with 19 employees or less are now required to report wages to the Australian Taxation Office via STP-ready software.

But new research conducted by global small business platform Xero revealed one in five small businesses wrongly believe the mandatory single touch payroll (STP) doesn’t apply to them, potentially putting their business at risk of non-compliance.

In a study of 300 small business owners, more than half of the small businesses surveyed (55 per cent) said they did not know what STP was, with another one in five (20 per cent) wrongly believing that STP did not apply to them. A staggering 11 per cent revealed they're not compliant yet. Despite the lack of adoption of STP technology, most small business owners feel positively towards technology, with two in three (66 per cent) agreeing it gave them a competitive edge.

So what does this mean for small businesses?

Matthew Prouse, head of industry at Xero Australia, says it’s the role of government, accountants and bookkeepers to assist small businesses navigate regulatory changes and help them understand that switching to STP is not as complex as it may seem.

“Small business owners are run off their feet and often don’t have the bandwidth to stay on top of all of the new technologies,” he said. “It’s a classic change management situation where we need to connect the need for change to a clear benefit they can achieve. This is particularly crucial in relation to boosting the uptake of STP.

“Advisers need to work with small business owners to help them navigate the process of understanding that STP adoption will provide them with a major boost to their business on a range of measures from efficiency to time saving and accuracy.” 

XERO’S CHANGE MANAGEMENT TIPS

To support small business owners in adopting new technologies and facilitating change, Xero’s change manager, Eve McKenzie, shares her top tips:

1. Keep it clear and simple. Paint a clear, positive picture of where you and your team are heading. Simplify the project you’re about to introduce and break it down into ‘bite-sized chunks’ of achievable milestones.

2. Stimulate relatable desire. Consider what is important for your staff and how they will benefit from the change. Connect the reason for the change occurring to something you know is going to be appealing to them and that will stimulate their desire to want to change.

3. Make sure there’s an owner. Put someone in charge of the project to ensure it continues progressing. Not only does this help speed up the journey, it’s less uncomfortable to staff if the change is structured, controlled and clear updates are provided to the impacted people.

4. Prepare your people for change. People are the common denominator of any change. They are either impacted by the change or playing a role in implementing the change (or both), so they need to be considered and protected to the best of your ability during a change period. Think about what they need to have, or need to be able to do, in order to be successful in the new state.

5. Cater for some disruption. Employees need time to learn or new systems and processes may need to be configured or adjusted. To help you through this period of disruption, best to think about what else is likely to occur during this period and try to avoid distractions or burn out. Be realistic about your business operations and outputs during that time. If you can spend the time and energy integrating the change thoroughly, it will become operationalised much quicker and more efficiently.

ABOUT XERO

Born in the cloud, Xero is a beautiful, easy-to-use platform for small businesses and their advisers. Xero provides its 1.8 million subscribers with connections to a thriving ecosystem of 700+ third party

apps and 200+ connections to banks and financial service providers. On the inaugural 2018 Financial

Times FT1000 High-Growth Companies Asia Pacific list, Xero was the fastest-growing tech company in

the $200 million+ segment. Xero won ‘Bookkeeping software of the year’ from the Institute of Certified

Bookkeepers UK in 2018 and was rated by Canstar Blue as Australia’s best accounting software over

four consecutive years, 2015-2018.