A poll of 5,000 self-employed workers, carried out by Intuit QuickBooks, has found that an average self-employed person spends 2 weeks a year to get their finances in order, making bookkeeping very time-consuming.
The study revealed that three-quarters (75%) of the UK’s self-employed workforce use the same bank account for personal and business income.
The study also found that on average, sole traders spend two hours every week separating business and personal finances.
This is the equivalent of 15 working days in a year!
Looking for ways to cut down on your book keeping time?
Taxpayers with small tax bills can secure a cash flow advantage by filing early. However, the option is only available to those in PAYE employment who earned additional income during the year on which they owe tax.
If the tax owed is less than £3000 you can request HMRC to calculate whether the underpaid tax can be taken from your salary or pension in equal instalments.
As per HMRC five thousand taxpayers qualified last year but failed to file in time.
Unsurprisingly, one in five (19%) self-employed individuals said they were nearly put out of business because of poor financial management of processes like expenses.
More worryingly, the study found that self-employed workers are faced with major challenges. The biggest are:
There is a bottomless pit of reasons for business failure, but, according to Dominic Allon, MD of Intuit Europe, more often than not, it boils down to the management of business finances.
The poll concluded that ‘businesses treat finances as an afterthought’.
"Our research shows how damaging this approach can be. We still see many self-employed manually tracking expenses on paper or spreadsheets. No self-employed worker can afford to spend significant time unpicking personal and business expenses when there are business critical activities to focus on - and get paid for. Financial management needs to be at the heart of any strategy, right from the start of any business endeavour, otherwise there is a real risk of failure."