The 3 Best Single Touch Payroll Providers for Small Businesses

Single touch payroll is now compulsory for most businesses, so don’t get caught out. We break down the ATO’s single touch payroll requirements, see how different solutions stack up, and recommend the top 3 solutions for your small business.

single touch payroll

What is single touch payroll?

Single touch payroll is a new way for Australian small business to report employee salary, tax and superannuation information to the tax office.

A few years ago, small businesses were required to send the tax office yearly payroll summaries, such as:

  • An annual payment summary report that outlines how much the business paid in salary, the tax withheld, and the super contributions they made
  • A payment summary for each employee that outlines the same information but specific that each employee

Instead of lodging these reports, the information is automatically sent to the tax office during every pay run. This is done automatically through single-touch payroll compatible payroll or accounting software.

Single touch payroll software will automatically send your employee salary, PAYG and superannuation information to the tax office during every pay-run. No more group certificates or end of year ATO reporting.

How does single touch payroll work?

Single touch payroll is very simple to use, because it is built into your payroll or accounting software.

Setting up single touch payroll

Each payroll and accounting software will have a slightly different setup process for their single touch payroll functionality.

But the main thing to note is that you will have to call the ATO and give them proof of business ownership. To do this, you just need to give the ATO a special software ID number that you’ll find in your payroll and accounting software platform.

Filing your single touch payroll during a pay run

Filing your single touch payroll report is very simple. You just run your payroll to pay your employees and give them a payslip as normal.

In your payroll or accounting software platform, you should see a button next to each pay run that says something along the lines of ‘file’ or ‘report’. Click that button and the information is automatically sent to the ATO.

Single touch payroll is very simple to use, because it is built into your payroll or accounting software. Source: Xero

What are the benefits of single touch payroll?

Single touch payroll has a number of benefits for both employers and employees alike.

Benefits for Employers

  • Single touch payroll reporting eliminates a number of end of financial year ATO reports, helping you save time during a particularly annoying and busy time of year.
  • The ATO uses your single touch payroll data to automatically fill a number of fields in your BAS statements, which reduces the risk of errors.
  • You no longer need to write up yearly payment summaries for your employees at the end of the financial year.

Benefits for Employees

  • Employees can see an up-to-date view of their payments, tax withholdings and super contributions in the MyGov portal.
  • Pay information is pre-filled in employees’ tax returns, which makes life easier during tax time and means that employees don’t have to wait to receive a payment summary from their employer.

Does single touch payroll apply to sole traders?

Officially speaking, sole traders are not considered employees of their own business. Instead, they are the sole director and sole shareholder of their business.

In most cases, this means that their income is considered personal services income, and they are not required to comply with single touch payroll.

How to get started with single touch payroll

As a small business owner, you have a few decisions to make before you start single touch payroll:

  1. Decide whether you will lodge yourself or via a service provider. You can either submit yourself through your payroll or accounting software, or have a registered tax or BAS agent to submit on your behalf.
  2. Choose your software platform. If you’ve decided to submit yourself, you will need to choose STP-compliant software. This could be your existing accounting or payroll software. If you’re a micro business with less than 5 employees, you should consider low-cost solutions.
  3. Ensure that your staff are trained. If you have a bookkeeper or accounting on staff, you should ensure they understand and are properly trained in single touch payroll, including things like how to report, addressing errors, maintaining records, etc.
  4. Start sending single touch payroll reports. Once you’re ready, you can start sending reports through your payroll or accounting software.

Our picks for the best single touch payroll providers

Xero Payroll

Best for: Small businesses that want the most payroll features.

Xero is the most widely used accounting solution for small business, so it’s not surprising that their payroll software is top-notch.

They also offer the broadest range of payroll functionality in the market, which makes them our pick for best single touch payroll providers. Their functionality includes flexible pay calendars, multiple pay rates, built-in timesheets, leave and entitlement tracking, and expense reimbursement built into the pay-run.

The only downside is that Xero Payroll only supports businesses with 1-4 employees. If you have more than that, then you’ll have to move to the Xero Accounting Premium Plan, which starts at $65 per month. This comes with a bunch of accounting functionality, which you may or may not need.
If you have five or more employees and don’t need a fully-fledged accounting solution, we suggest that you check out Reckon One Payroll below.

Xero Payroll Pricing and Features:

  • $10 per month (1-4 employees)
  • Flexible pay calendars
  • Multiple pay rates
  • Built-in timesheets
  • Annual and sick leave tracking
  • Expense reimbursement
Xero Payroll STP

Xero Payroll is our pick for the best STP solution for small business

Reckon One Payroll

Best for: Small businesses with five or more employees.

It’s surprisingly difficult to find a payroll solution for small businesses with five or more employees. At this size, most payroll providers will force businesses off their $5-10 payroll solution, and onto their $30+ full suite accounting and payroll platform.

Reckon One Payroll offers a cheap flat-price for all businesses, no matter how many employees their have. And theory $7 pricepoint is one of the lowest on the market.

They offer all the most important single touch payroll features, including flexible pay calendars, multiple pay rates, and leave and entitlement tracking.

These features should be good enough for most small businesses. Still, it’s worth noting that they don’t offer any timesheet functionality or expense reimbursement.

Reckon One Payroll Pricing and Features:

  • $7 per month (unlimited employees)
  • Flexible pay calendars
  • Multiple pay rates
  • Annual and sick leave tracking
Reckon One Payroll STP

Reckon One Payroll is the best STP solution for small businesses with 5 or more employees

Payroo

Best for: Small businesses that want a standalone payroll solution with a per-employee pricing structure

To be honest, Xero and Reckon will be suitable single touch payroll solutions for most small businesses. But if you want to steer clear of major accounting brands or want to pay on a per-employee basis, then you might want to consider Payroo.

Payroo is a quick and simple solution for small businesses to get started with single touch payroll. It’s not packed with bells and whistles — but it is really easy to get started and includes pretty much everything you’ll need.

Features include built-in timesheets, multiple pay rates, and leave and entitlements tracking. And many small businesses rave about Payroo’s customer service, so if that’s important to you, then we suggest that you check these guys out.

Payroo Pricing and Features:

  • $2 per employee per month
  • Multiple pay rates
  • Built-in timesheets
  • Annual and sick leave tracking
Payroo STP

Payroo is a great no-frills single touch payroll solution with class-leading support