East Midlands businesses feel overwhelmed by regulation and tax, survey finds
With a month to go before the Government’s new VAT rules come into force, almost 5m small business owners admit feeling “overwhelmed” by regulation when starting up.
According to analysis from small business software app Xero, three-quarters of UK businesses said early growth was stunted because of the amount of time and expense it took to become financially business literate.
In the East Midlands that translates to:
- 77% feeling overwhelmed by regulation and taxes when starting their new business
- 85% having had had less than 24 hours’ worth of financial experience or business education at the time of starting their new business
- 54% never having submitted a tax return before then
- 23% having been fined up to £500 because of tax filing errors
The research found that two-thirds (63 per cent) of small firms admitted to having less than one day’s corporate financial experience or business education prior to the launch of their business.
Furthermore, more than three quarters (78 per cent) of small business owners had never submitted a tax return before starting up, with two thirds (66 per cent) admitting they’d been hit with tax return fines – with the most common fine being between £300 and £400. The repercussions can be even more severe; according to Xero, 50,000 small businesses fail each year due to cash flow issues.
What is clear, however, is that it’s impossible to ignore Making Tax Digital, says Gary Turner, co-founder and MD of Xero. He said: “The sooner your business assesses its current systems, how they need to change and what services could offer a workable solution, the better prepared your enterprise will be.
“Small business owners feel overwhelmed by paperwork and rules they don’t have time to get to grips with. Many may see Making Tax Digital as another thorn in their side, but our research also shows that once business owners get on top of their finances, these businesses often prosper more quickly.”