As Prime Minister Tony Abbott continues to remind us that Australia is ‘open for business’, recent discussions have brought to question just how conducive the business environment really is, especially for small and medium sized enterprises (SMEs).
According to a research by the Chartered Accountants Australia and New Zealand, tax compliance is costing SMEs approximately $18.4 billion a year. The average gross tax compliance cost is approximately $11,000 a year.
These findings are likely to raise more than a few eyebrows in the business community. As such, the accounting body has urged the government to review small business compliance requirements to give SMEs a boost and help reduce compliance costs. The recommendations put forward include:
- A clear definition of what a small business is.
- Investment in technology, which allows the ATO to collect data more efficiently and develop better risk identification techniques to identify compliant businesses.
- Recognise the impact of compliance costs to small businesses, so better tax concessions can be proposed to help them.
A positive change
On a positive note, a recent Dunn & Bradstreet (D&B) Business Expectations Survey found the number of startups in Australia jumped by 23 percent from the previous quarter and 8% from a year ago to 62,160. The pickup in new businesses reflected a current mood of positivity about the trading environment. According to D&B, sales outlook for the fourth quarter (Oct – Dec 2014) has also risen to its highest level since 2003, with 46 percent of businesses expecting increased business activity.
Meanwhile, the government has recently launched an initiative designed to help new businesses grow and succeed called Start Up Australia. It is an entrepreneur-led not for profit organisation to help create more entrepreneurial ventures.
Reduce compliance costs
In order to minimise compliance costs, it’s very important for small business owners to plan and review their compliance costs, forecast cash flow, and seek advice from their accountants and bookkeepers. MYOB will make it easy to comply with the Australian Taxation Office (ATO). Ensure you have a current accounting software subscription when lodging your BAS or making your pay run.