The end of the financial year is one of the most anxious times for Australian small businesses, with many reporting bewilderment at the complexity of tax reporting in the latest American Express Tax Time Survey.
Small business owners also reported feeling stressed by the amount of paperwork involved at the EOFY, with 91 percent revealing they don’t have a thorough understanding of their annual tax obligations and 84 percent admitting they’re unsure about what business expenses can be claimed.
American Express Head of Small Business Services Jason Fryer said the Tax Time Survey showed completing a business tax return for the first time stirs up feelings of anxiety amongst business operators.
“The research shows that almost all new business owners wonder at some stage if they have complied with the latest tax legislation and whether they will fall foul of the tax office if they make a mistake,” he said.
The study found three-quarters of small business owners find tax reporting and the completion of their Business Activity Statement (BAS) a burden, with more than 35 percent identifying these tax requirements as a cause of stress. This result places tax-related issues on par with cash flow management as the greatest area of stress for small business owners.
The survey of over 500 businesses also found the most stressful aspects of tax and BAS reporting are ensuring accuracy (39 percent), access to supporting documents such as receipts and invoices (38 percent) and reporting deadlines (36 percent).
To compensate for this anxiety, two thirds of small business owners would have liked more advice when starting their business, with over 30 percent reporting tax and BAS reporting advice as the most needed.
Tips from American Express to get ahead when the EOFY rolls around:
- Keep on top of receipts and records by entering them into the company’s reporting system regularly;
- Look into accounting software and other financial products that will help to minimise time spent collating receipts and recording transactions;
- Consider the time-saving benefits offered by business charge cards;
- Always keep business and personal expenses separate, using a dedicated business card is an ideal way to do this;
- Familiarise yourself with the various tax concessions and small business reporting obligations for small businesses by attending the ATO’s free national seminar program for people who are new to business; and
- Speak to an accountant for their advice on the best solutions for your individual business as well as the latest regulatory and legislative changes.
Need more EOFY tips from an expert? Check out a recent blog from MYOB’s Julian Smith which looks at how best to prepare for the end of the financial year.