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Misplacing important documents and receipts and forgetting to claim deductions are the most common problems, Xero says.
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Small businesses ‘overwhelmed’ by EOFY tax compliance, survey finds
12 June 2024
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Most small business owners feel overwhelmed by the end of financial year, with the task of navigating tax compliance being the main pain point, according to a new Xero survey.
Xero said the busy season was stressful for 71 per cent of over 1,000 small business owners surveyed, with 83 per cent reporting one or more aspects of their year-end tasks as “overwhelming”.
ANZ managing director Anthony Drury said the survey showed that the end of financial year was a difficult period for small businesses.
“It adds greater pressure on time, resources, and is compounded by the challenges they are facing in the current economic climate – from the rising cost of living, to a drop in small business labour productivity,” he said.
More than half (56 per cent) of small business owners said they made mistakes during their past year-end preparations.
According to Xero, the most common mishaps were misplacing important documents or receipts (32 per cent), forgetting to claim a significant deduction (31 per cent), entering incorrect figures that lead to tax errors (14 per cent) and accidentally deleting crucial financial records (11 per cent).
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Respondents said the biggest misconceptions around the end of financial year were the fact “itʼs just a one day event” (47 per cent), “itʼs easy to prepare for” (43 per cent) and “itʼs only about taxes and paperwork”.
Drury encouraged small business owners to connect with their accountant or bookkeeper throughout the year to make preparations easier.
“The end of financial year period highlights how important those relationships are as advisors can help to alleviate pressures, from managing records and financial statements to understanding tax compliance,” he said.
“Complementing your accountant or bookkeeperʼs advice with digital tools is an excellent way to automate repetitive tasks such as receipt capture, invoicing and bank reconciliation, and help manage the risk of errors.”
The survey findings came after a similar survey by QuickBooks reported small and medium businesses felt underprepared for tax time and were experiencing “receipt regret”.
Over half or 51 per cent of Australian SME owners admitted they had regretted not being more organised with their receipts throughout the year, the survey said.
The research also found that the time spent preparing for the end of financial year tax added stress for SME owners, with nearly 1 in 4 (23 per cent) saying it affected their overall work/life balance.
A quarter (25 per cent) said they spend about 10 hours preparing for their tax return, while 13 per cent spend 15 hours or more. Just under half reported completing their tax return themselves without the help of an adviser.
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