“Many operators are making significant personal sacrifices over and above running their day-to-day business, making EOFY not only stressful but a period where meeting their EOFY obligations is eating into time that should be spent on working to achieve business results” explained John Moss, Chief Strategy Officer, MYOB.
7 in 10 working weekend or late nights
In the lead up to this year’s EOFY, 42% of operators have been working weekends (up 5% from the previous year), and a further 26% have been working after midnight to meet reporting obligations. The Business Monitor also found that 35% of operators don’t commence their EOFY paperwork until July.
“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,” Moss said.
“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.”
The Business Monitor revealed that the timeline for EOFY preparation varies widely between SMEs. While some business owners get cracking a month before the end of June (30%), some don’t begin until the end of August (10%).
“This is one of the most important administrative activities of the business year and getting it right can mean the difference between business success and failure,” Mr. Moss said.
Agribusinesses don’t start prep work in time
The Business Monitor found that SMEs in the Agribusiness sector were most likely to start preparation following he EOFY (53%).
Interestingly, business owners in the older demographics, including Baby Boomers and Traditionalists, were also more likely to start preparation later at 41% and 44% respectively. Many sole operators are also following this trend, with 41% beginning the process post-June 30.
When looking at preparation methods, the Business Monitor found that over a third of business owners (36%) tackle aspects of their EOFY reporting themselves, with a large majority also using the support of an accountant (63%) or a bookkeeper (19%).
“What we’re seeing here is a discrepancy between how small business owners are feeling and what they are willing to change. We know SMEs are feeling the pressure, yet a third of SMEs say they won’t be doing anything to cut down the time it takes to get ready this year.”
Avoid the pain, gain back time
Moss told Dynamic Business that operators who commence preparing their EOFY well in advance of 30 June and embrace new technologies can avoid a lot of pain and dedicate more time to running their businesses.
“Operators who are prepared early and see an accountant in April or May with their books sorted – whether that means they did it manually as paperwork or electronically through accounting software – can have an important conversation,” he said.
“They can point to where they stand and ask their accountant, ‘what should I do over the next four to six weeks to optimise the outcome?’ If you are so flat out with their business that the deadline is not top of mind or you begrudge your obligations to the extent that you leave them until after EOFY – by then, it’s too late to change the outcome.
“If you’re a sole trader with two to five employees, it will likely fall to you and no one else to get all the paperwork into shape. If you are doing this manually, rather than using accounting software, you will have a lot of paperwork on your hands. For instance, you will have to ensure invoices are sorted, expenses are lined up, receipts are collected, and that you have allocated across business vs personal transactions.
“Due to the ease of data entry, accounting software can help operators reclaim their weekends and nights. The available software today is generally smart enough that when you purchase fuel from a service station it says, ‘This is from Caltex, it looks like fuel, do you want to file this under motor expenses?’ So, it does remove a lot of the pain around reconciliations and the paperwork. You can also split transactions between personal and business. For example, if you frequent Caltex, you might implement a rule where half the cost is automatically deemed a business expense, half is personal. Having these things set up saves a massive amount of time, not just at this time of year but throughout the whole period.”