New research by cloud accounting solution, Xero, has found one in five small businesses are still relying on old-fashioned methods to process their payrolls despite the fact Single Touch Payroll (STP) is expected to be extended as compulsory to all businesses from July 1 2019.
STP is a new way of reporting tax and super information to the ATO in real-time from an employer’s payroll software each payday. Currently, STP is compulsory for employers with 20 or more employees.
Trent Innes, Managing Director of Xero Australia, said Xero’s data shows that businesses leveraging digital the most are seeing significant benefits with increased revenue and employment growth, and he encouraged small businesses to embrace digital transformation to ease the strain of compliance.
“The ATO’s introduction of STP is a huge step to help reduce the compliance burden on small businesses. I’m excited that this will be boosted by more businesses using dedicated payroll solutions, which will help save them even more time, so they can focus on what matters – running their small business,” Innes said.
“However, we need to be supporting these businesses, many of whom are transitioning from outdated spreadsheets, paper-based systems, or even faxing this crucial data.”
Xero’s research showed over a third of businesses (37 per cent) had yet to consider digital solutions for their payroll.
“This reaffirms that many small business owners will be moving from a paper or spreadsheet solution to a payroll provider or platform, increasing the potential stress of this transition,” Innes said.
Innes suggests supporting small businesses to automate and digitise their data is vital.
“As a nation, it’s important that we help small business owners understand that digitising and automating their backend processes can provide a huge competitive advantage. Of course, it saves time, but most importantly it frees up the headspace needed to move beyond administering a business and start developing it,” Innes said.
Meanwhile, 54% of small business owners said they would prefer to outsource or automate their payroll and tax processes – more than HR and recruitment, sales and marketing, and IT management combined. This isn’t surprising considering more than one in four (28 per cent) spend over two hours a week on the payroll, with 8 per cent spending over five hours weekly just on payroll documentation and processing.
“Doing business today means there’s so much more that technology can do to take the pain points out of running a business so that owners can concentrate on what they’re most passionate about,” said Innes.