Accountants reveal top 5 EOFY mistakes by SMEs

The end of financial year (EOFY) is just around the corner and Australia’s EOFY experts have revealed the most common slip-ups SME clients make around this crucial time of year. These include miscoding bank transactions and no contact with their accountant over the financial year.

In an Institute of Public Accountants (IPA) member survey conducted in partnership with MYOB for the second year running, 56% of respondents said their clients were almost prepared with submitting their EOFY statements but just needed to finalise a few things. 40% said their clients try but need much more preparation, while 4% said their clients weren’t prepared at all. No respondents said their clients were completely prepared.

Top mistakes made with EOFY statements

The survey suggests a growing proportion of business operators are not making contact with their accountant over the financial year and are not making the most of their accounting software functionality. However, business operators are making inroads into their accounts and record keeping:

1. Miscoding bank transactions (65%) – on par with last year’s survey

2. Not keeping accounts and records up-to-date throughout the year (58%), slightly down on 62%

3. No contact with their accountant over the financial year (58%), up from 42%

4. Does not provide enough detailed or supporting information (49%), down on 64%

5. Not fully trained up on accounting software functionality (46%), up from 39%

When asked about the most important steps business operators could take to prepare for EOFY, accountants ranked ‘advise on any major transactions throughout the year as they happen (sale of land, shares etc.)’ first (91%). Second equal was ‘responding to requests for additional information in a timely manner’ (84%) and ‘clarity and consistency of information provided in support of their financial statement’ (84%). Third was ‘ensure all documents sent through are labelled/organised’.

IPA chief executive officer, Andrew Conway said, "We encourage small businesses to draw on the expertise of their public accountant beyond compliance reporting and income tax returns. Engagement with their accountant during the course of the year can be very beneficial, as they can access strategic business and planning advice to help them become more profitable. They can also be provided with a more holistic service including assistance with sales and growth forecasts, cash flow management, accessing funds and succession planning."

MYOB General Manager, Accountants Division, Adam Ferguson said, "It’s tempting to put the books on the backburner, however lack of preparation is often the reason why June 30 fills business owners and their loved ones with dread. 64% of SMEs use an accountant to help them with EOFY compliance. The small businesses who work closely with an accountant and also use trusted online accounting solutions are significantly reducing time-consuming errors.

"It makes life much easier if operators regularly update their accountant, record all transactions as they occur through the year, and make the most of time-saving technology. For example, using online accounting features such as bank feeds where automatically imported and coded into the software, this daily feed means keeping up to date with your accounts now takes a lot less time than in days gone by. Just ensure your provider guarantees highly accurate, reliable and secure data feeds. This eases the workload for a client and their accountant and frees up their time to focus on their role as a business advisor too."

Visit http://myob.com.au/taxtime for a summary of major tax changes, helpful tips, resources and more.