Are you a small business? Here's what you need to know about the latest STP changes

July 8, 2021

Over the last two and a half years, the Australian Taxation Office has been pushing for Single Touch Payroll compliance for small businesses.

With initiatives supporting Australia’s small business owners in handling digital rollouts for payroll, from PAYG to wages, the ATO has been slowly but steadily moving towards a new set of compliance requirements. As of the 1st July 2021, STP is no longer optional, and the majority of small businesses will be required to meet specified STP compliance rules.

Want to know what this means for your small business? We've covered all you need to know to ensure you comply and are on track for your payroll this year:

What is STP?

STP is Single Touch Payroll, a reporting system required by the Australian Taxation Office for all employers. It is an initiative created by the Australian Government to reduce the necessary amount of reporting to Government agencies. STP-enabled software directly reports all the required information automatically, including salaries and wages, PAYG withholding and superannuation.

What does STP compliance entail?

To comply with Single Touch Payroll, small businesses must digitise their payroll using suitable software. Unless a deferral or exemption covers your business, all employers of all sizes are required to meet these Government requirements. While there were further exemptions, from the 1st of July, the vast majority of small businesses will need to follow the ATO's requirements for compliance with STP reporting.

What are the changes under the new compliance requirements?

As of the 1st July 2021, most small businesses will be required to use STP compliant software, even if they were exempt previously. This may mean you have to opt into the initiative for the first time, or it could mean that previously unreported employees must now be included within your STP digital payroll process.

The two most significant changes are:

• Closely held payees will not need to be reported through STP on a monthly, quarterly or per-payday basis.

• Micro and seasonal businesses will now need to report on a routine basis, instead of quarterly, unless they have a specific exemption pre-defined by the ATO.

What is a closely held payee?

The most significant and relevant change to many small businesses is reporting closely held payees through the STP digital process. The ATO defines a closely held payee or employee as someone related to the source of payment. An example of this would be a trust fund beneficiary or a relative within a small family business. The reason for past exemption was because irregular and infrequent payments were more common with closely held payees.

How will I need to change my processes for closely held payees?

From the 1st of July, absolutely everyone paid through your business will need to be accurately conveyed to the ATO via the STP digital reporting process. However, to acknowledge the variability of closely held payees, the ATO allows reporting on a payday basis or a quarterly basis. It's also possible to submit a reasonable quarterly estimate in the case of highly variable pay.

What do the changes for micro and seasonal businesses mean?

For extremely small or seasonal businesses, there is no longer any exemption in place for payday reporting. While previously, micro-businesses or specific industries could report quarterly, this is no longer the default. Reporting on a payday basis is a requirement, no matter how small the business is.

Affected industries include:

• Fishing, forestry & farming

• Clubs and associations run as not-for-profits

• Intermittent and seasonal employers

Certain businesses may be eligible for specific concessions or special circumstance exemptions, so it's essential to check with your advisor or look at the ATO website to see where your business lies.

Can an advisor help with managing STP changes?

Working with a trained and qualified advisor is always a good idea when it comes to ATO compliances. 360 Accounting Services can provide an expert eye and insight into the new changes and requirements under the STP. With the end of the financial year just on the horizon, it’s better to get in touch with us sooner rather than later to ensure everything is organised in time. Our professional team are on hand to ensure you meet your compliance requirements.

Getting started with your new STP compliance requirements

Do you need extra guidance on STP or have to comply for the first time? Getting started is easy with the proper support. Our expert team can advise on the best software and provide insight into how best to comply with ATO requirements. We know that STP can be confusing for small businesses, so we go the extra mile to deliver a clear-cut, straightforward approach to your compliance responsibilities.

Get in touch today to find out more and chat with our friendly team, or check out our other posts for up-to-date news and information on the latest in Australian finances.

< Older Post Newer Post >

Share This Post

Simple Financial Habits for Business Owners

By 360Accounting Services • November 5, 2025

Simple Financial Habits for Business Owners Running a business comes with a myriad of responsibilities, and sometimes, financial management can feel overwhelming. However, by adopting a few simple financial habits, business owners can maintain better control over their finances, ensure long-term stability, and reduce stress. This blog post will outline some essential practices that can make a significant difference. 1. Separate Business and Personal Finances This is perhaps the most fundamental rule for any business owner. Commingling funds can lead to confusion, complicate tax filings, and make it difficult to accurately assess your business's financial health. ● Open Separate Accounts: Set up distinct bank accounts and credit cards for your business. ● Avoid Personal Expenses from Business Accounts: Even small, seemingly insignificant personal purchases from your business account can create headaches. ● Pay Yourself a Salary: Treat yourself as an employee of your business and pay yourself a regular salary. 2. Track All Income and Expenses Accurate record-keeping is crucial for understanding where your money comes from and where it goes. This information is vital for budgeting, forecasting, and tax preparation. ● Use Bookkeeping Software: Invest in reliable accounting software like MYOB, Xero, or QuickBooks. These tools automate many tasks and provide clear financial reports. ● Categorise Transactions: Consistently categorise your income and expenses. This helps you identify spending patterns and areas for improvement. ● Keep Receipts: Digitise or keep physical copies of all business-related receipts. This is essential for auditing and expense verification. 3. Regular Review of Financial Statements Don't just record transactions; understand what they mean. Regularly reviewing your financial statements will provide insights into your business's performance. ● Profit and Loss (P&L) Statement: Review your P&L monthly to see your revenues, costs, and profits. ● Balance Sheet: Check your balance sheet quarterly to understand your assets, liabilities, and equity. ● Cash Flow Statement: Analyse your cash flow regularly to ensure you have enough liquidity to meet your obligations. 4. Create and Stick to a Budget A budget is your financial roadmap. It helps you allocate resources effectively, prevent overspending, and work towards your financial goals. ● Develop a Realistic Budget: Base your budget on historical data and realistic projections. ● Monitor and Adjust: Regularly compare your actual spending to your budget and make adjustments as needed. ● Allocate Funds for Taxes: Set aside a portion of your income for taxes, as estimated taxes can be a significant surprise if not planned for. 5. Build an Emergency Fund Just like personal finances, businesses need an emergency fund to weather unexpected challenges, such as a sudden drop in sales, equipment breakdown, or economic downturns. ● Set a Target: Aim to have at least 3-6 months of operating expenses saved. ● Automate Savings: Set up automatic transfers from your operating account to your savings account. 6. Regularly Reconcile Bank Statements Bank reconciliation ensures that your internal records match your bank statements. This helps catch errors, detect fraud, and verify the accuracy of your books. ● Monthly Reconciliation: Reconcile your bank accounts and credit card statements every month. ● Investigate Discrepancies: Promptly investigate any differences between your records and the bank's records. 7. Seek Professional Advice While these habits provide a strong foundation, there will be times when you need expert guidance. ● Consult a Bookkeeper or Accountant: A professional bookkeeper or accountant can help set up your systems, ensure compliance, and provide strategic financial advice. ● Tax Planning: Work with a tax professional to optimise your tax strategy and ensure you're taking advantage of all eligible deductions. By consistently practicing these simple financial habits, business owners can gain a clearer picture of their financial health, make informed decisions, and pave the way for sustainable growth. Start implementing these habits today, and watch your business thrive. For more detailed guidance and personalised support, contact us at 360 Accounting Bookkeeping Services. We're here to help your business succeed. Contact Us: Phone: Parikshit Kikla (PK) Email: pkikla@360accountingservices.com.au Website: https://www.360accountingservices.com.au/