Small firms flag hassle of bookkeeping as Making Tax Digital nears  

New research suggests that the majority of small business decision-makers liken running their firm to a juggling act.

Over a quarter say bookkeeping is the biggest source of hassle when running a business – well over half state that central and local government add to the hassle they face.

Federation of Small Businesses (FSB) National Chairman Mike Cherry said: “Being a small business owner means juggling a huge number of responsibilities. We have to move towards an environment where entrepreneurs can focus on running and growing their firms, rather than having to worry about paperwork and red tape.

“These findings [from the Iwoca research] serve to underscore the need to reduce bookkeeping burdens placed on small firms, improve their access to finance and tackle the policy-linked costs they’re hit with every day.

“The average UK small business loses £5,000 and 15 working days a year to tax compliance activities. Done right, the roll-out of Making Tax Digital in April should help to arrest this shocking waste of time and money. Done wrong, MTD will mean confusion and increased costs as software providers see it as an opportunity to unfairly hike prices.

“With MTD obligations kicking in around Brexit day, we now need to see HMRC doing all it can to raise awareness among, and increase support for, small firms transitioning to the new interfaces in under six months’ time.

“Too few small firms are applying for external finance to help achieve their growth ambitions, and too many are not aware of all the options available to them. Open Banking holds a lot of promise in this space. If we can get banks and finance providers embracing this initiative, more small firms will be in a position to apply for alternative finance – and have their applications fast-tracked when they do.

“More than half of small firms see government as a source of hassle. Local and central government should aspire to be a help, not a hindrance, to our entrepreneurs. Last month’s Autumn Budget contained a lot of welcome interventions but – with the number of business births now dropping for the first time in almost ten years – there’s still a lot of work to do.”