How accounting complexity is causing issues for SMEs
Small businesses in the UK are struggling to overcome the complexities of accounting, according to new research.
A third of microbusinesses admitted to being overwhelmed by corporate accounts while a similar number of business owners were worried about completing business tax returns properly.
These concerns over paperwork and understanding the jargon attached to it were highlighted in research from cloud software provider FreeAgent.
Conducted by YouGov on behalf of the firm, the study also revealed that one fifth of small companies do not use technology when staying on top of their accounts.
Not only does this increase the chances of errors occurring, but it also makes it more difficult to find any mistakes after they have taken place.
One in six firms also said they could not access all of their important financial information straight away, meaning they may struggle to react immediately to any issues should they occur.
With many small businesses already operating on tight budgets, they can ill-afford to miss deadlines for corporation tax, VAT or self-assessment, all of which carry large fines.
These financial outlays could place additional pressure on finances, making it tough for businesses to grow and succeed.
More than one in ten microbusinesses missed deadlines according to the study, which equates to around 650,000 UK firms – 450,000 of which faced fines.
It is suggested that firms or business owners with concerns lack the confidence needed to manage their accounts effectively.
Searching for financial help should help to alleviate some of these concerns, while any owner fearing serious money issues should contact insolvency practitioners at the first opportunity.
Solutions might exist that can ensure a company can continue trading, but these measures tend to perform best when they are introduced at an early stage.
Alternatively, opting for technological systems to aid with accounting processes may also help to reduce some the potential risks that are involved.
By Phil Smith