The beginning of the new financial year can be a transformative time for SMEs in terms of reviewing finances and making important business decisions about the year ahead. However, many SMEs dread tax time, often due to the large volume of expense receipts, invoices, payroll data and income information that needs to be searched for, sifted through, and added up.
This doesn’t have to be the case. SMEs are increasingly taking up automated spend management platforms that store and process a variety of expense data throughout the financial year, making it easy to locate and review come tax time. If not already done, SMEs should invest in the latest technology to streamline and automate the finance function, remove manual work, and make time and resources available for growth.
Having all finance and payment data digitally viewable and stored in one accessible, secure, and mobile-friendly place can help SMEs and their employees easily and efficiently complete tax returns, without needing to chase up missing files. Accurately filling out tax documents also means SMEs won’t be liable to pay more tax than they rightfully need to.
Automated invoice and expense management tools can help SMEs prepare for the new financial year in the following four ways:
1. Improved ease and efficiency.
It can be hard to keep on top of all finance activity, despite how small a company might be. Having the ability to simply photograph or digitally capture payment and income data can help employees and managers ensure all transactions are immediately processed and accounted for, and ready to be reviewed come EOFY. This considerably reduces time that would otherwise be spent sorting through physical receipts and documents, and re-calculating expense numbers that don’t seem to add up.
2. Increased mobile accessibility.
It’s important SMEs know that preparing for tax time doesn’t just start when the tax reporting period begins. Practising good expense and income processes throughout the entire financial year contributes to smooth and seamless tax returns. This means employees always need access to smart expense tools to record finance data, regardless of their location; a particularly useful service for travelling employees, whose expense claims, payment data, and finance activity will need to be accurately accounted for.
3. Boost compliance
Most SMEs can’t afford the fines and penalties that come about because of inaccurate tax returns. Likewise, incomplete or late tax returns can set small businesses back by over $100 for each month after the reporting deadline. (1) It’s critical SMEs abide by finance reporting regulation, and can provide evidence to support claims made in tax returns. Evidence in the form of receipts, invoices, pay slips, income data and expenses can help SMEs ensure the information they provide in their tax returns is correct and up to date, and confidently answer any inquiries from the ATO.
4. Data-informed decisions
With finance data accurately stored and viewable, SMEs can use EOFY as a time to deduce meaning and lessons from the previous financial year. Tracking payment data and expenses can help managers decide where to reduce budgets for the new financial year, and what areas can be invested in more for the company’s growth. This type of visibility into finance data can influence a more cost-effective and rewarding future for SMEs.
Falling behind in tax obligations holds SMEs back on their growth journeys, and can open up tricky situations when it comes to tax and reporting compliance requirements. Digital expense management systems can help SMEs ensure they’re prepared for EOFY duties, as well as ready to responsibly and smartly manage a host of new finance data.