Changes to how businesses pay provisional tax will remove a key pain point for most small business owners says online accounting software provider MYOB.

It says the April introduction of the pay-as-you-go Accounting Income Method (AIM) will move tax from being an extra compliance process, to being part of the normal accountancy work a business already does to keep on top of its finances.

The changes will remove a lot of the tax uncertainty in having to estimate tax liabilities based on the previous year's finances, and gives businesses a clearer understanding of the costs that are impacting their day-to-day operations. “It's big news for Kiwi businesses,” says MYOB CEO Tim Reed.

“Small businesses consistently tell provisional tax rules are a key pain point. Making the process as simple as possible will be a huge step forward.

MYOB's Business Monitor research of more than 1,000 local SMEs saw 83% of businesses identify “simplification of provisional tax rules and processes to make it easier for businesses to accurately determine and meet their tax obligations“ as the government policy most important to their operation.

“Advances in our ability to provide real-time information about cashflow and costs in a business means that we can start to build in these tools to make paying tax a whole lot easier.

The way the new system will work is that for a business with less than $5 million revenue, every three months its cloud accounting software will calculate the tax obligations owed based on real time analysis of the business' cashflow and expenses, and prompt the owner to submit a return.  That will then be lodged directly to Inland Revenue through the software and as long as the business pays what the system has calculated, if there is a difference at the end of the financial year the business will not have to pay use of money interest.

The Government calculates that 110,000 businesses could benefit from the changes.

“MYOB is committed to helping small businesses to succeed. We're hugely supportive of these changes because it will mean business owners spend less time worrying about tax and compliance and more time focusing on growth,” says Reed.