Australian small businesses dominate the economy, but often struggle to survive and meet their financial obligations.
The Australian Taxation Office has shared some statistics and insights that paint a revealing picture of Australia’s small business sector.
ATO deputy commissioner Deborah Jenkins, in a speech to the Institute of Public Accountants’ national congress, said there are about 4 million small businesses in Australia. These small businesses:
- Account for 99% of businesses in Australia
- Contribute $380 billion to the economy
- Employ 5.6 million Australians
Ms Jenkins also said that Australia’s small businesses (which the ATO defines as companies with annual turnover of under $10 million) are a diverse group:
- 78% of small businesses have no employees
- 70% have turnover less than $75,000
- 70% pay their tax on time
Ms Jenkins also shared some interesting generalisations about Australia’s small businesses:
- They often have limited business knowledge
- They are time-poor
- They are generally not tax-literate
- They often struggle with cash flow
- They can find tax and super complex and overwhelming
- They often use intermediaries – most commonly tax agents or bookkeepers
- They are often slow to adapt to technology for business operations
Almost half of small businesses are under financial pressure within the first year of starting, according to Ms Jenkins.
More than 60% of small businesses cease operating within three years, she added, with 90% of small business failures being due to poor cash flow.