Small businesses lose 12 days and up to £5,000 per year just dealing with tax.
By John Hoskin, tax and accountancy specialist.
Figures recently released by the Federation of Small Businesses show that half the owners of the UK’s smallest businesses – such as limited companies run by freelance contractors – spend between two and eight hours per month understanding
, calculating and completing tax forms and that for 11% of them, tax administration takes an astonishing six days per month! This is a significant amount of time to lose from running a business and servicing customers, in what is often a very demanding and challenging environment, for contractors that are often already working long hours, or looking for professional freedom rather than a bureaucratic nightmare!
Furthermore, it was reported that these businesses spend up to £5,000 per year accessing help to deal with their tax obligations, with two thirds estimating an average annual cost of £3,651. Despite this financial outlay, one in five stated that a lack of understanding about what’s required by the tax system has led to missed deadlines and late payments of taxes, with almost one in three saying that a lack of cash flow planning has resulted in them not paying taxes on time.
Reflecting on the importance of the army of small businesses and self-employed individuals in the UK to the economic recovery, the FSB Chairman used the figures as evidence for the need for further tax simplification for the smallest businesses.
However, tax simplification or not, it simply doesn’t have to be this way, if you have an adviser that supports you in the right way. The level of time commitment, the cost, the lack of planning and the missed deadlines described in the report are just totally unnecessary, if the right support service is used.
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