New research by global small business platform Xero reveals that 71 per cent of small-business owners and decision-makers consider the end of financial year (EOFY) period as “stressful” and 83 per cent say that one or more of its aspects are “overwhelming”.
The survey, which focused on the sentiments among SME leaders on EOFY, found that the leading source of overwhelm during EOFY was navigating tax compliance (33 per cent). This was closely followed by gathering financial data (32 per cent), the time investment required (30 per cent), staying on top of receipts (28 per cent), and balancing financial deadlines with day-to-day operations (26 per cent).
“Our new research demonstrates that EOFY can be a difficult period for small businesses,” Anthony Drury, Managing Director for ANZ at Xero, commented, “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. Our aim for this research is to highlight these common pain points around EOFY preparations, so we can provide practical tips for small businesses to use right now.”
The study reveals that 56 per cent of small-business owners confessed to making a mishap in their past EOFY preparations, with the most common of these mishaps being the misplacement of important documents or receipts (32 per cent), forgetting to claim a significant deduction (31 per cent), entering of incorrect figures that lead to tax errors (14 per cent) and accidental deletion of crucial financial records (11 per cent).
When asked what the biggest EOFY misconceptions were, respondents selected ‘itʼs just a one-day event’ (47 per cent), ‘itʼs easy to prepare for’ (43 per cent) and ‘itʼs only about taxes and paperwork’ (42 per cent).
“We always encourage small-business owners to connect with their accountant or bookkeeper throughout the year to make EOFY preparations easier,” Drury said. “EOFY highlights how important those relationships are as advisors can help to alleviate pressures, from managing records and financial statements to understanding tax compliance.”
“Complementing your accountant or bookkeeper’s 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,” Drury added. “Xero’s research shows how powerful digital adoption can be in terms of boosting productivity outcomes, as it allows small-business owners to spend less time labouring on manual tasks and more time focusing on running their business.”
