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The decision to make your first hire is a sign of growth and success; a watershed moment for any business. Unfortunately, for over one-third of Australian small business owners taking on staff also means adding hours of payroll documentation and processing onto their workload every week. Something they might not expect. 

Most people don’t start their own business to sweat over backend accounting and payroll processes, yet new research by Xero reveals more than a quarter (28%) of Australian small businesses are spending two hours every week completing payroll, and a further 8% are spending more than five hours. 

It seems the majority know there must be an easier way, with 54% saying they would prefer to outsource or automate their payroll and tax processes. So, what’s holding them back? For many, I suspect, it’s the fear of change. 

However, the implementation of Single Touch Payroll (STP) is proof that we are catapulting towards a time where digitisation is no longer a “nice-to-have”, but a “have-to-have”. 

It should be Simple Touch Payroll 

STP is a new reporting rule that requires Australian businesses with 20 or more employees to digitally lodge their payroll-processing details to the ATO in real time, with every pay cycle. 

It has been in effect since 1 July 2018 and the decision on whether to roll it out to businesses of all sizes is currently with parliament. In spite of this, our research shows that 25% of Australian small businesses with 50 or more employees still do not know what STP is. 

It may sound daunting at first, but with the right software, STP can be as easy as the touch of a button. In fact, I prefer to think of it as ‘Simple Touch Payroll’, because that’s what it should be: simple. 

Interestingly, we found that 37% of small business owners haven’t considered moving to a digital payroll program to prepare for STP. 

Crossing the digital divide 

When even government institutions such the ATO are embracing the benefits and efficiencies of digital connectivity and automation, you know we are really starting to leave the analogue world behind. 

But despite significant advances in software and technology, many Australian small business owners are yet to cross the digital divide. I was amazed to discover that 23% are still processing payroll manually, and that 19% rely on spreadsheets. 

The reality is analogue systems are outdated, unnecessary and surrounded by friction, meaning business owners end up doing a lot more processing and manual paperwork than they really need to do. For example, one in three Australian small business owners provides payment summaries or group certificates to their employees via mail or fax, while 36% say they have faxed payroll information to the ATO in the last year. 

Simple software solutions and digitisation can help small businesses streamline their payroll and end-of-financial year processes, leaving owners with more time and mental energy to focus on those individual passions that drove them to set up shop in the first place. 

And small businesses don’t need to navigate the transition alone. Accountants and bookkeepers can advise you through the digital transition, to set your business up for success. 

While it’s okay to fear change, you can’t ignore it: digitisation is coming whether we like it or not. As software developers, it’s up to us to support small businesses through these changes and, through our designs, to make it as simple as possible for them to meet their obligations. 

About the author

Trent Innes, Xero Australia Managing Director

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Trent Innes

Trent Innes

Trent Innes is the Chief Growth Officer at SiteMinder

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