Almost three quarters (71%) of small business owners and decision makers consider the end of financial year (EOFY) to be stressful, while 83% find one or more aspects overwhelming, according to new research from global small business platform, Xero.
The top source of overwhelm during EOFY was found to be navigating tax compliance (33%), closely followed by gathering financial data (32%), the time investment required (30%), staying on top of receipts (28%), and balancing financial deadlines with day-to-day operations (26%).
Xero Australia and New Zealand managing director, Anthony Drury said, “Our new research demonstrates that EOFY can be 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 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.”
More than half (56%) of small business owners confessed to making a mishap in their past EOFY preparations. The most common mishaps were misplacing important documents or receipts (32%), forgetting to claim a significant deduction (31%), entering incorrect figures that lead to tax errors (14%) and accidentally deleting crucial financial records (11%).
When asked what the biggest EOFY misconceptions were, respondents selected ʻitʼs just a one-day eventʼ (47%), ʻitʼs easy to prepare forʼ (43%) and ʻitʼs only about taxes and paperworkʼ (42%).
“We always encourage small business owners to connect with their accountant or bookkeeper throughout the year to make EOFY preparations easier. EOFY highlights how important those relationships are as advisors can help to alleviate pressures, from managing records and financial statements to understanding tax compliance,” Drury added.
“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. Xeroʼs 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.”