By Daniel Hunter
UK micro-businesses are wasting millions of extra days every month on their accounting, new research from FreeAgent suggests.
In a poll conducted by YouGov on behalf of FreeAgent, who provide cloud accounting system for micro-businesses and freelancers, almost a quarter (23%) of respondents said that they personally spent more than one full working day per month on financial administration and managing their accounts, while 8% said they spent three or more working days doing this.
FreeAgent said a typical micro-business should need to spend no more than eight hours every month to manage their accounts, including all of their general bookkeeping, expenses, invoices and reconciling their bank transactions.
By projecting the data across the UK’s 5 million-strong micro-business sector, the research suggests that approximately 1.4 million micro-business owners are currently spending more time than they need to on their accounts - and that extra time equates to a total of around 2.4 million unnecessary hours during an average month.
In addition, the poll - which surveyed more than 500 micro-businesses and sole traders - found that more than half (54%) of respondents use either pen and paper or a spreadsheet as the main method to manage their accounts, rather than specialist software or using an external accountant or bookkeeper.
Ed Molyneux, CEO and co-founder of FreeAgent, said: “Accounting may not be the most enjoyable part of running a small business, but it shouldn’t have to be difficult. We firmly believe that, for a typical micro-business, all of your important accounting tasks can be completed in an hour or two per week, and with the right tools in place, you may find it takes even less.
“But the research suggests that many small business owners actually find it very time-consuming to keep on top of their accounts. Almost a quarter of them spend more than one working day per month on accounting, while some even spend 6 days or more and that’s time that all adds up. Across the whole of the UK, this means that millions of hours are effectively being wasted on accounts every month.”