MYOB releases study on small business
As a small business accountant based in Sydney, it was interesting to read from a recent study released by MYOB Australia some surprising statistics about small business in Australia.
The report highlights a number of areas of concern for small business owners, namely the complexity of complying with ATO requirements as well as the issues surrounding the collection of GST on behalf of the ATO.
Most businesses reported that they are now spending up to 10 hours per month on preparing BAS data for the ATO, with over a third of small business owners also stating that they thought the BAS paperwork was overly complex.
Now, from a small business accountants point of view, I can understand where they are coming from. For a small business owner with no formal training in Australian income tax and GST laws, the administrative requirements would become quite complex, leaving business owners feeling resentful of the ATO and the entire process of collecting, reporting and paying GST. Hence why 59% of small businesses feel like they are an administrative department of the ATO. It is also surprising that whilst 75% of small business owners are begging for the BAS process to be simplified because they find it too complex, 75% of small business owners who do their own BAS reporting are still confident that they are getting it right.
From our experience as small business accounting specialists, I can assure you that there are many business owners out there who are quite misguided in thinking that they are getting it right. We have had numerous clients coming to us and having to lodge amended BAS returns due to errors on the part of the business owner. There is also a perception out there for small business owners that by handling the BAS process on their own they are saving money. This thought process is wrong on two counts. One, a small business owner must look at the opportunity cost of the time they have spent doing the BAS paperwork, given that, I can assure you that your accountant could do it in less time, and secondly, the costs of getting it wrong can far outweigh the annual costs of handing over the GST administration of your business to a specialist.
Talk to your accountant, you'll be surprised by how much of YOUR time you can free up. After all, isn't it better to have your accountant putting pressure on you to meet your obligations and keep you out of trouble, than relying on yourself as a busy small business owner?
The second aspect of this MYOB report into small business is the alarming statistic that only 35% of small businesses are actually putting money aside on a regular basis so that they can pay their monthly or quarterly BAS as and when it falls due. We can appreciate that the economy is tight at the moment for many businesses, but using the ATO as a source of working capital is fraught with danger.
Due to recent funding increases, the ATO is chasing more and more small businesses and making it increasing difficult to negotiate payment arrangements for clients that have ongoing debts to the ATO. By meeting your ATO obligations you will have a much better appreciation of your true cash flow position and be in a better position to plan your business finances for success.
Overall, the report indicates that many small businesses are preferring to do their own BAS paperwork and that is fine by us as accountants. It is just so frustrating that we see business owners coming to us to fix problems that really did not need to occur in the first place. A quick phone call or meeting with your small business accountant can prevent so much anguish over this aspect of your business. As a small business owner reading this, I am sure that I do not need to point out that one less headache for you will allow you to focus on growing your business, rather than stressing each time that dreaded pink form arrives in the mail!