Nowadays, companies need to be efficient and accurate in payroll administration. For these cases, a good alternative is to apply Single-Touch Payroll (STP), which is considered the best solution to simplify payroll management. That is, this innovative system guarantees regulatory compliance and also frees up valuable time and resources for a company.
What does Single touch payroll mean?
The single touch payroll definition better known as STP, is a digital system for reporting payroll data. This way, employers will be able to report their employees’ salaries, and payroll information and at the same time pay employees.
This system provides so much transparency and much-needed fluidity when it comes to company payroll information. Additionally, you can report on employees’ payroll every time you pay them using STP-enabled software.
Single touch payroll process
You already know what is single touch payroll, but it remains to know how this system works. Basically, when this system is run every day, the software is responsible for sending payroll data. In this way, the single-touch payroll process begins on each payday where the employer determines pay for each employee.
The normal payment is then executed using software that supports STP. In this way, the software calculates the tax required per employee. When the payment has been completed, the employer is responsible for sending the payroll to all its employees.
The method to send the payroll will depend on the employee, but you can do it by email and upon completion make the payment to the employee. Thanks to this, the employee can review all the information regarding his salary in a digital format and much easier to understand.
What does this system mean for companies and employees?
There are key benefits for both businesses and employers using STP. Among these, they will be able to streamline the process for submitting reports. In this way, old systems that require a large amount of work at the end of the year are left behind.
Additionally, errors and the time required to prepare this type of information will be greatly reduced as the STP takes over reporting on paydays. Therefore, the single-touch payroll means that companies that use it will be greater the more they are responsible for this type of task.
In the case of employees, the implementation of this digital system will give you instant access to earnings information from the year to the date your employers paid. This way, they will be able to more easily notice any errors in their salaries and notify their employers as quickly as possible and have them resolved as soon as possible.
Benefits of using Single Touch Payroll (STP)
Timely and optimized reports
Previously, companies had to withhold amounts from an employee’s salary when making each payroll. They then have to submit a corresponding withholding on the monthly or quarterly reporting dates.
Thanks to Single Touch Payroll, you can have the report at the same time as the payroll is being made. That is, employers can engage in all activities at the same time without having to worry about extra reporting dates.
Minimize human errors in payroll payment
The use of Single Touch Payroll means automatic calculations, that is, the possibility of human error is significantly reduced. Specifically, in issuing calculations and entering employee payroll data.
Reduction of procedures for human resources
Thanks to the implementation of Single Touch Payroll, it is not necessary to run payroll manually. As a result, there is no longer the large amount of paperwork that the human resources team used to handle to pay payroll.
Ease of access to employee information
Previously, employers had to wait for new employees to provide certain information before conducting payroll. For instance, tax file numbers and retirement information. Thanks to the STP, employers can access the online portal and search for this information on their own.
Improvement in payroll compliance
By automating much of the reporting process, Single Touch Payroll improves compliance. Additionally, companies tend to send more up-to-date information more frequently; without worrying about missing a reporting deadline.
How can an entrepreneur implement Single Touch Payroll (STP)?
Initially, to implement STP, you need the software you have to be compatible with it. Most payroll providers have had Single Touch Payroll updates since the resolutions came into effect. That is, most platforms have the ability to adapt to this.
However, if this is the first time you are going to pay your employees from payroll software, it is essential to verify that it is STP-compliant before signing the contract. Additionally, you may need to enable STP report sharing, depending on your payroll software.
After setting up the software, you can run payroll, and pay employees as usual. In addition, being able to give each of them a pay slip. Upon completion of payroll, the STP-enabled software will compile a report with all the necessary information for the employer. Especially, everything needed for the tax office.
Finally, the reports will be sent to the tax office and they can compare them with the employer’s and employee’s records. The idea of this is to ensure accuracy and security regarding payroll payments to the company and employees.
FAQs
What is the main advantage of single-touch payroll?
Thanks to Single-Touch Payroll (STP), payroll reports are sent directly to the government every time the company runs payroll. As a result, companies do not need to generate and submit separate reports on a monthly or quarterly basis.
Is it mandatory to implement Single Touch Payroll?
Currently, the UAE government does not force any company to have this system. However, it is good to start implementing it because it is a practical alternative for both employers and employees.
What is a Single-Touch Payroll summary?
A single-touch payroll summary is a report that includes salaries, wages, contributions, and pay-as-you-go withholdings for employees.
What are the disadvantages of STP?
Single Touch Payroll’s software is completely automated and this can make it difficult to implement changes. For example, incorporating credits or deductions when hiring new employees.
Additionally, the single-touch payroll process requires that payroll data be hosted by a third-party provider. As a result, concerns may arise about data storage and security. If you want to avoid this, it is best to clarify these doubts with the external provider from the beginning.
