New research from small-business platform Xero reveals that 66 per cent of small-business leaders do not actually fully understand all the parts of a business tax return. The study also shows that 30 per cent of small-business leaders actually taught themselves how to lodge a company tax return online and a further 12 per cent never learnt how to lodge a tax return.
Furthermore, small-business leaders do not fully understand some key components in filing their taxes, such as tax offsets (42 per cent), asset depreciation (33 per cent), profit and loss statements (26 per cent) and overseas transactions. (21 per cent)
On a more positive note, the research does uncover the fact that 76 per cent of Australian small businesses have been engaged with an accountant or tax advisor at EOFY, with 27 per cent learning how to file their business return with the help of a tax advisor. In addition, 27 per cent take time to double-check what they are eligible to claim for online, while only 19 per cent will check in with an advisor.
“The research highlights a concerning but unsurprising education gap for people who run a business at tax time,” Joseph Lyons, Managing Director for Australia and Asia at Xero, said. “After all, most Australians who start their own business do so because of passion or opportunity, not because of a love of financial and business administration. That’s all the more reason to make sure small-business owners and sole traders make use of the right people, like accountants and bookkeepers, and cloud tools to stay compliant and on track.
“These advisors can guide small-business owners through the complexity of the EOFY process and set them up for success,” Lyons added. “They’re the secret sauce to being confident heading into EOFY.
“Tax season can be stressful so preparation is key, whether you run a business or are filing your personal tax return. While it can take time to set up good processes and say goodbye to the shoebox of receipts, it’s a worthy investment that will make the whole experience smoother for years to come,” Lyons concluded.