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Micro-businesses spend 10 weeks a year sorting their finances, equating to 15 hours per week, new research has shown.
The most time-consuming finance task is accounting, taking the average micro-business 1.7 hours each week, meaning micro-businesses spend more than one week every year solely on keeping the books.
According to research conducted by a digital banking service, Starling Bank, accounting is more likely than any other job to eat into downtime. It is also considered the most stressful element of running a business, with more than one in five (22 per cent) firms stating this is the case.
Time spent preparing tax and VAT returns is another hurdle, with micro businesses admitting they spend 1.6 hours a week on processing or chasing incoming payments, and preparing their taxes.
In a recent study, it was found that most small businesses make mistakes on VAT returns, potentially leading to tax overpayments. Meanwhile, it is estimated that chasing late payments contributes to the failure of 50,000 small firms each year, costing the economy £2.5 billion.
Banking tasks also take up a significant amount of time, at around 1.5 hours a week – this is partly down to many micro-firms still visiting branches to get things done, with 40 per cent going at least once a month, most commonly to deposit cheques and cash and make payments, Starling Bank said.
According to the bank’s research, micro-businesses are sacrificing time they could be spending on sales, networking or training staff, in order to complete their financial admin tasks. While a majority recognise time spent on financial admin is an issue, most (59 per cent) aren’t confident that they spend the right amount of time on it and one in four (27 per cent) think it takes them far too long.
Starling Bank spoke to over 1,000 micro-businesses in the UK in October 2019, including sole traders and companies with one to nine employees.