[APRIL 24th, LONDON] Business owners find managing taxes more stressful than getting their business off the ground, according to new research launched today by accounting tech provider, Sage.
Nearly half (48%) feel stressed about accumulating and misplacing paperwork while a third still use manual methods for their Self-Assessment tax returns – rising to 40% for sole traders.
If these 30% of businesses could reclaim just one hour per week spent on admin, it could add £6.6bn to the UK economy annually. Sage estimates better adoption of tech could help cut business admin in half.
This year, over 12 million taxpayers completed self-assessment tax returns. The study found doing these taxes was more stress-inducing (46%) than growing their business or sales (44%), managing cash flow (44%) and securing capital for business investment (38%).
The research by Sage also revealed SMB owners spend more time running their business each week than sleeping. On average, they invest 51 hours weekly in their business and get five hours of sleep each night. Additionally, they dedicate an average of 11 hours to childcare, five hours to shopping and errands, and another five hours commuting to and from work.
It comes as Sage launches a brand new app and free membership plan for sole traders and self-employed individuals – Sage Accounting Individual - available on web and mobile to help simplify management of their finances and taxes.
The findings also show getting bogged down with paperwork gets in the way of investing in new tech for 41% of business owners. Over half (51%) dream about having to spend less time on admin.
Nearly a third (31%) struggle with forming habits to better manage their finances and almost half (49%) admitted to old-fashioned record-keeping, such as storing their business receipts in a box or plastic bag.
Sage Accounting Individual will help alleviate the frustrations of the dreaded annual tax problem, as well as helping to future-proof the taxpayer for future legislative changes. This includes empowering them to work alone, or instantly find, connect their data and collaborate with accountants whenever they need that added professional expertise and advice.
Despite the challenges the majority (66%) of SMB owners are confident about growing their income in the next two years, with women more confident than their male counterparts (70% versus 64%). Nearly half (43%) also hope to use artificial intelligence (AI) technology to run their business better.
To help SMBs further, Sage has launched its generative AI assistant – Sage Copilot - to revolutionise accounting, finance and people management processes through AI. Sage Copilot will soon be available to be added to Sage customer’s subscriptions.
Andreas Georgiou, VP Product Marketing, Small Business from Sage said: "Our research shows bosses and sole traders are getting bogged down by tedious admin, which is costing them valuable time. We’re working on freeing up their time so they can focus on what matters – growing their businesses.
"As we introduce Sage Accounting Individual it's important to remember that forming good habits is something we can do all year, not just in January.
The digital record keeping software is for sole traders and self-employed individuals who need to manage their income and expenses to complete their annual Self Assessment tax return, as well as helping with overall productivity - addressing pain points like cash flow, access to finance, getting paid faster and collaborating with their accountant where they have one."
Case Study:
Autumn Rabbitts, 40, nearly closed down her patisserie when the stress of admin left her in tears and unable to cope. Now that her business is thriving, she’s eager to share the lessons she learned along the way.
The Northumberland resident said: "In the early days I was juggling getting my business off the ground with raising five children while my husband was away working in the RAF.
"As someone who's dyslexic and dyspraxic, I really struggle with numbers and organisation. Grappling with admin, taxes, and paperwork on top of everything else was an absolute nightmare.
"I was working nonstop, drowning in paperwork, and only managing to grab around five hours of sleep each night. The stress reached a point where I seriously considered throwing in the towel."
When Autumn launched her patisserie on the high street of a Northumberland market town in 2021, the constant worry of missing tax deadlines and facing potential penalties also loomed large.
She said: "Handling everything manually, I procrastinated embracing tech because I worried it would only add to my workload. But after months of losing receipts and always feeling two steps behind, I realised I had to make a change."
Autumn began using Sage a year into her business to manage her accounting and keep track of all her company’s sales and finances.
She said: "It was a game changer. Automating everything into one space gave me precious time back to dedicate to growing my business. I’m now able to see what periods are good and what periods are bad and am able to track my sales across the year."
"My advice to anyone starting out their business journey would be to embrace technology from the get-go. Don't wait until you're drowning in paperwork like I did and don't be afraid to seek help or guidance when you need it. I’m now finally feeling confident about what the next couple of years have in store."
About Sage
Sage exists to knock down barriers so everyone can thrive, starting with the millions of Small and Mid-Sized Businesses served by us, our partners and accountants. Customers trust our finance, HR and payroll software to make work and money flow. By digitising business processes and relationships with customers, suppliers, employees, banks and governments, our digital network connects SMBs, removing friction and delivering insights. Knocking down barriers also means we use our time, technology and experience to tackle digital inequality, economic inequality and the climate crisis.
