Xero shares year-round financial habits to help small businesses reduce tax-time stress, improve cash flow visibility and make better decisions with their accountants
Tax season has long meant pressure for small businesses: chasing deadlines, locating missing documents and worrying about costly mistakes. While compliance remains a critical function of a business, this reactive approach to tax time is causing unnecessary stress for many small businesses.
According to Xero’s 2026 Emotional Tax Return Report, 85% of South African small business owners identify financial management as the main stressor of running their business. At the same time, other research from Xero shows 77% say their accountant or bookkeeper is their most trusted adviser, while 78% say these professionals have been crucial to their survival.
For SMEs navigating complex obligations and an uncertain economic environment, building sound financial habits throughout the year can make tax time more manageable and turn compliance into a source of stronger business insight.
The opportunity, says Xero, is for small business owners to move tax preparation from a once-a-year compliance exercise to a regular financial management discipline.
“The most important action a small business owner can take is to keep their financial records current throughout the year, not only when tax season arrives,” says Hendrik Wessels, Partner at accounting firm Risen Advisory. “Do not wait for tax season to find out how your business is performing. When information is current, an accountant can help a business plan. When it is months behind, tax season becomes a rescue exercise.”
For SMEs, this starts with building simple, consistent routines. Business owners should understand the taxes for which they are liable, the relevant filing and payment periods, and any allowances or incentives available to them. Calendar reminders for deadlines and requests from accountants or tax practitioners can prevent last-minute pressure.
Setting tax funds aside each month – including VAT and payroll-related taxes – is another important safeguard. “Tax penalties and interest can be punitive on a business’ cash flow,” says Colin Timmis, regional director for EMEA at Xero. “Separating tax money from working capital can help businesses avoid an unexpected liability becoming a wider cash-flow problem.”
Technology can also support better habits ahead of tax time. Using online accounting software allows business owners to capture and store financial records as they go, retrieve historical documents quickly and access current business information remotely.
“Real-time financial data gives owners a clearer picture of what is coming in and going out of the business,” says Timmis. “Whether they are with a customer, onsite or travelling, they can make timely, data-informed decisions. Having this information in one place makes it easier to plan ahead for tax time with their advisor.”
“Compliance is not only about meeting SARS requirements,” adds Wessels. “A business that is tax-ready throughout the year has better records, reporting and visibility over cash flow. That enables owners to identify issues earlier, plan with confidence and make better decisions.
Wessels serves a number of farming clients, an example that illustrates the point well. “Because their businesses are seasonal and input costs can be significant, having accurate and up-to-date records allows us to review actual results against the budget and estimate tax liabilities well before the due date,” he explains. “This gives the business time to plan their cash flow, manage input purchases and avoid being caught off guard by tax payments.”
By treating tax preparation as a continuous business discipline rather than an annual deadline, South African SMEs can reduce stress, protect cash flow and create more time to focus on growth.
Xero’s tax tips:
- Understand the basics: Know which taxes apply to your business, key compliance and payment dates, and any relevant allowances or incentives you qualify for.
- Set tax funds aside monthly: Keep tax money in a separate account from working capital so an unexpected bill doesn’t disrupt cash flow.
- Keep records organised to reduce the admin burden: Capture and store financial records as you go, using smart tools that read the data and organise it for you in your accounting software. Digital records make it faster to retrieve historical information for SARS or service providers.
- Review financials regularly: Monitor profit and loss, reconcile balance-sheet items such as loans, credit cards and debtors, and check cash flow and forecasts frequently.
- Plan with an adviser: Ask an accountant or tax practitioner for regular compliance-status updates, guidance on changing legislation and a year-round checklist. They can help you plan ahead, not just file on time.
For South African SMEs, the message is simple: don’t wait for tax season to find out how your business is doing. Building these habits into the year-round rhythm of the business means tax time becomes less about scrambling for missing information, and more about planning with confidence.
“When small businesses have accurate, up-to-date financial information, they’re able to make faster, more confident decisions – not just at tax time, but throughout the year,” says Timmis.