Self-employed workers and small business owners in England are effectively losing thousands of pounds each year by spending excessive time on unpaid administrative tasks, according to new research.
The Hidden Cost of Being Your Own Boss
A poll of 500 self-employed individuals and small business owners has uncovered a significant financial drain. The typical self-employed worker dedicates a substantial 17 hours every month to business administration. This is time that, if spent on income-generating work, could put an extra £3,000 in their pockets annually.
The study, commissioned by Virgin Money, highlights the profound stress associated with these tasks. Nearly half (45%) of respondents admitted they 'dread' the tax return season and procrastinate for as long as possible. Furthermore, 53% rated it as the most stressful period of their entire year.
Widespread Stress and Administrative Errors
The burden of paperwork is causing significant operational issues for many. A striking 49% agreed their life would be substantially better if business admin was easier to manage. The frustration is so intense that 22% have even considered returning to employment for someone else just to avoid managing their own administrative duties.
This admin overload leads to tangible business problems. One in five confessed to having missed collecting a client payment due to disorganised paperwork, while 16% failed to pay a supplier on time for the same reason. Compounding these issues, the research from OnePoll.com found that 57% do not use any dedicated software or apps to manage their finances, and 47% use their personal current account for both business and personal expenses.
Preparing for a Digital Tax Future
The research was conducted to raise awareness of the government's upcoming Making Tax Digital initiative. Simon Norman, Head of Business Bank at Virgin Money, commented on the findings, stating: “Doing your tax return doesn’t have to be daunting, but our research has shown it’s a real headache and many see tax admin as the biggest stress of their jobs.”
He emphasised the importance of preparation, saying, “With important changes coming, it’s essential self-employed people and small business owners are preparing now to get ahead of the curve, so digital-only returns don’t come as a shock.”
To assist with this transition, Virgin Money is offering fee-free access to accounting software with its business bank accounts. Norman also highlighted that having a separate business bank account is a crucial step towards simplifying the process, as it eliminates the time-consuming task of separating personal and business expenses.
