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Home Cashflow Business Blog The five big EOFY stuff-ups that stress out small business owners

There’s nothing like topicality in a blog. In fact if you read my blogs often enough, you are possibly thinking right now that there’s seldom anything like topicality in my blogs! I’ll admit that I jump all over the place a bit, but I take comfort in the fact that what I have to say is usually relevant, if not always topical.

This week I thought I’d break from form, step away from that other subject that’s diverting everyone’s attention at the moment – the Feral Election – and get topical for a change. Let’s focus on a subject that, as small business owners, we really should be paying close attention to right about now – the end of the financial year.

The folks responsible for some of Australia’s most popular accounting software recently conducted a survey and found that of all small and medium business owners, over half get stressed and worried over preparing for EOFY. Even more feel that EOFY compliance is burdensome pain in the bum, and plenty more besides admitted to being utterly in the dark when it comes to knowing which changes in legislation and compliance are relevant to their businesses.

Of course if you’re still handling your business accounts manually, none of this is really surprising. Tapping away, entering data and keeping records the old-fashioned way can quickly become more than a full-time job, and even if you’re perfectly okay with employing someone in your business to take it on, you’d better hope that individual is efficient, on-the-ball, and a proper obsessive when it comes to keeping an eye on the details.

If you’re a small business owner/manager and you’re the one taking care of the accounts…well, good luck with that. All I can say is that if your aim is to grow your business, this is not the way forward. You’re either going to become a full-time accountant very quickly, or, far more likely, you’re going to ignore accounts whenever you can, and then hurry through them in a half-arsed manner at the last minute when you’re absolutely forced to act…which brings us smack-bang back to the reason why EOFY is so stressful to so many small business people in the first place.

Leaving everything until the last minute cranks up the time pressure. Time pressure in turn leads to mistakes…you can see how it becomes a vicious cycle. The same survey I mentioned a bit earlier in this blog uncovered some more interesting statistics that make up part of a sort of ‘top five EOFY statement mistakes and slip-ups’. Take a look at the factors causing stomach ulcers and sleepless nights in Australia’s small business owners;

 

1)    Around 65 percent of small business owners admitted to miscoding transactions.

2)    A whopping 64 percent didn’t provide enough supporting information.

3)    39 percent weren’t properly trained to use their accounting software.

4)    62 percent didn’t keep their accounts up-to-date throughout the year.

5)    42 percent had no contact with their accountant throughout the financial year.

 

There are some eye-watering numbers in there, but the one that really has me bashing my head against the wall in frustration is the statistic regarding small business owners who have zero contact with their accountant across the whole of the financial year…then probably expect miracles come EOFY. Wow. I go on about this, I know, but the fact is that if you repeat that mistake again and again over enough years, the best you can hope for is that you’ll lose a lot of money and hate your life at tax time. At worst you’ll simply drop yourself deep enough into the manure to sink your business for good. So here are a few simple tips to help make things better;

Invest in some decent business accounting software.

Business accounting software is neither hard to find nor hard to use nowadays. Unless you’re working in a one person micro business making natural pottery ashtrays – and even if you are – it’s well worth getting a package up and running to help achieve a couple of things. The first of those things is simplifying transaction and data entry so that you’re less likely to leave loose ends throughout the year. The second is making both your job and that of your accountant easier at EOFY.

Invest in some decent training!

I can’t tell you how often I hear of business owners who bite the bullet, go out and splash proper money on a good business accounting package…and then march back into the office and hand it over to Marge, that woman down in dispatch who seem to know a bit about computers. Get real! Make sure that you not only carefully choose the person or people who’ll manage your business accounting via your software package, (often this will deeply involve one or two, and also involve all of your staff at a basic level) but that you also ensure they have the relevant training in how to use it properly.

Yes, I’m going to mention your accountant again.

And I’m going to do it for a couple of reasons. The first reason is the one I always mention; that if you’re only seeing your accountant once a year, you can pretty much expect to fail at EOFY. Develop an ongoing and regular relationship with your accountant so that he or she gains insight into how your business is travelling throughout the year, and is better placed to advise you when EOFY comes around. If you’re a couple of steps behind in what we’ve been discussing, you might even choose to open the conversation by asking your accountant for advice on which business accounting software package to choose. Many packages help your accountant to remotely track transactions, incomings and outgoings, get a feel for how your business is travelling and even alert you early if they spot something amiss. Early access to the right data can save your business thousands, even tens of thousands.

Remember that many accountants will take on your ‘book work’ manually if they really have to. But think about it…do you really want to be paying your accountant good money for endless hours of number-crunching simply because you’re too lazy to get your act together? Surely an accountant’s time would be better spent acting as a business advisor, bringing real value to your business.

No-one, not even accountants, enjoy the ‘accounts detective’ drudgery that comes with a small business accounting system that isn’t up to scratch. Money can be hard to earn and easy to lose, especially to the ATO, so if this EOFY has been hell on your blood pressure, the best advice I can give you is to go and treat yourself to a Financial New Year’s gift in the form of an effective business software package. If you’re a bit stuck regarding which package might be a good choice, there are dozens of reviews on the web to help get you started down the right path.

Oh, and if you can barely remember your accountant’s name, now might also be a good time to consider a re-think regarding how often the two of you communicate. It’ll be good for your business and remember, contact with humans is beneficial for bean counters, too…

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