Small business owners losing three weeks every year to tax compliance
New research from the Federation of Small Businesses has revealed that the bureaucracy surrounding tax compliance is costing entrepreneurs significant time and money, and hampering growth.
SMEs in the UK are facing an uphill battle with taxes, with the average small business losing three working weeks and spending 5, 000 on tax compliance every year.
Value Added Tax (VAT), Pay As You Earn (PAYE) and National Insurance Contributions (NICs), are the most time-consuming taxes, swallowing up an average 95 hours a year collectively.
This is according to a report from the Federation of Small Businesses (FSB), which also found that 46 per cent of small businesses struggle to determine tax rates, and 40 per cent find exemptions confusing.
The effect of the lost time and resources can have a significant effect on business growth. Around 47 per cent of small firms reported that business rates have hampered growth and the same proportion complained that corporation tax has stifled growth. Around one in seven small firms reported that VAT has prevented expansion entirely.
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A recent report by Sage, the cloud accounting software provider, came to a similar conclusion that administrative tasks take up a combined 120 working days per year, with accounting taking up over 20 per cent of the total administration time. In fact, the research showed that an increase in productivity of just 5.6 per cent in the UK could lead to an increase in GDP of at least 33.9bn a year.
Letitia Booty is a special projects journalist for Business Advice. She has a BA in English Literature from the University of East Anglia, and since graduating she has written for a variety of trade titles. Most recently, she was a reporter at SME magazine.
According to online bookkeeping platform Geniac, 61 per cent of smaller UK business owners conduct administrative tasks themselves, filling up their working day dealing with issues including legal matters, account handling and basic HR. more»