Recent research suggests SMEs have too little time to work on their taxes, causing a lot of stress – but the tips below can help businesses stay on track at EOFY.
According to the most recent MYOB Business Monitor survey of over 1,000 SMEs, business owners are putting in long hours to complete the necessary paperwork for EOFY.
The statistics show that 42 per cent of business owners are working weekends to make ends meet, an increase of 5 per cent from last year.
It was also found that 35 per cent don’t start on EOFY paperwork until after June, and 10 per cent start at the end of August.
“While it’s easy to put the extra work on the backburner, there are several actions small business owners can take to ensure they aren’t caught out at tax time,” said John Moss, chief strategy officer at MYOB.
“By starting early, as well as seeking out help from their advisers or using accounting software, SMEs can save a great deal of personal time and stress further down the track,” he said.
According the survey, using an accountant was the most preferred method of preparing for EOFY, at 63 per cent, followed by SMEs attempting to report by themselves, at 36 percent, and using a bookkeeper, at 19 per cent.
Confusion and time management
The second annual EOFY survey conducted by cloud accounting software company Xero reflected the statistics revealed by the MYOB Business Monitor, showing that business owners face substantial time-management issues when it comes to tax returns.
There’s no denying that EOFY reporting is an unwelcome task, with 45 per cent of surveyed small businesses saying they put off their tax return, and 20 per cent saying they find filling out the appropriate forms to be daunting.
Time is also a stress factor, according to 58 per cent of small businesses surveyed, while 30 and 29 per cent respectively said EOFY reporting takes time away from ‘focusing on business growth’ and ‘interacting with consumers’.
Some operators fail to balance their workloads, with 10 per cent of businesses surveyed saying that they ran out of time.
“The research echoes what we have been hearing from Australian small business owners for a long time now,” said Trent Innes, Xero Australia managing director.
“Small businesses are working hard but are time-poor, so sometimes they struggle to keep up.
“By planning ahead where possible and utilising technology … small businesses will be able to save valuable time during EOFY.”
There are also concerns that the Australian government could be doing more to help.
Half of the small businesses surveyed said easier government compliance would make the end of the financial year less stressful.
The first annual Xero EOFY Survey, conducted last year, showed that nearly 60 per cent of small businesses planned to utilise the $20,000 instant asset deduction.
However, this year’s information revealed that only 46 per cent actually made such a claim.
“The government could do more to make compliance easier for Australian small businesses, which ultimately will save them the time they need to invest back into their business.”
Tips to tackle tax
Speaking to My Business, Mr Innes provided his tips on how SMEs can successfully manage EOFY.
“I take my hat off to small businesses; to make a living out of your dream requires drive, passion and hard work, not to mention a lot of time doing compliance work,” Mr Innes said.
“In fact, it can be complex and particularly stressful at the end of the financial year, but it doesn’t have to be.”
One of Mr Innes’ suggestions was to be prepared.
“Small businesses should be conscientious and get themselves organised as early as possible to avoid an overwhelming workload come tax time,” he said.
“Preparation is key.”
Mr Innes also mentioned the importance of having a bookkeeper or accountant, similarly to what the MYOB Business Monitor survey indicated.
“Tax is a reasonably complicated area. Connecting with a bookkeeper is a good way to navigate EOFY with minimal stress,” he said.
However, he also advised investigating technology options to improve data storage.
“Good record-keeping is vital.
“Keeping documents electronically or in the cloud is a good idea, whether you use an accountant or bookkeeper, or do your own books.”