How to Simplify Small Business Tax Compliance

Around 96 per cent of businesses in Australia – over 2 million – are small businesses, which in turn employ around 5 million Australians. In this article, we look at some of the ways in which small businesses can simply their tax compliance strategy to save money and to improve productivity by freeing up time for core business activities. For specific compliance advice, it’s a good idea to consult accountants in Sydney or elsewhere in Australia.

1. Outsource Compliance

Tax Compliance Cuts into Personal Time for Small Business Owners

Research has suggested that too many small business owners devote a large amount of personal time on tax compliance. A 2010 study by Galaxy Research found that 40 per cent of small business owners spend personal time to address reporting obligations, with a majority dedicating as much as an extra 60 hours every year, or around one Sunday every month on tax issues.

When asked about what they would do if they could save time on tax, around 50 per cent of business owners stated that they would spend more time on personal and recreational activities. Around 43 per cent of respondents said they would spent time with family, while over a third stated that they’d use the extra time to improve their business.

Benefits of Outsourcing Tax Compliance

As such, small businesses can usually benefit from outsourcing tax, payroll, and other elements of compliance. Accountants with expertise in small business accounting in Sydney and around Australia are one of the key advisors who can help small businesses devote more time to core business activities and growing their business.

Benefits of outsourcing to an accountant include:

  • Improved accuracy. Avoid stressing out about compliance. A tax specialist can check your books for inaccurate or potentially costly errors.
  • Focus on core business activities. Whether it’s one day every month or more, as a small business owner you could be better directing the time to core business activities and maximising the growth potential of your business.
  • Save money. Using a tax advisor will save you money. Accurate reporting and compliance, as well as invaluable advice on your accounting records – these don’t just save you time now, they help you make better business decisions.

2. Set Up Effective Information Systems

Embracing technology can help any type of small business reduce the amount of time spent on tax compliance. With effective information systems, preparing quarterly and end-of-year statements can be vastly simplified.

Hand-written ledgers and paper receipts may be exchanged for software programs which are designed to reduce the number of times an entry needs to be recorded. For example, a purchase on your eCommerce website can be automatically logged into your accounting software by integrating your eCommerce program with the accounting software.

3. Lodge Forms Online

Rather than lodging paper forms, small businesses can save time by opting for the ATO’s electronic commerce interface (‘ECI’). PAYG withholding annual reports, TFN declarations, superannuation statements and forms, activity statements, and investment income reports can all be lodged through the Tax Office’s ECI.

The ECI software is free to download, and the the system is secure and allows you to check your figures before you lodge. It also supports the importing and exporting of data to compatible software programs. Using ECI can mean that your forms are processed more quickly.