A blurring of personal and business life is causing significant problems for the UK’s self-employed workforce, as self-employed workers spend over two hours per week separating business and personal finances, the equivalent of 15 working days a year.
In a study of over 5,000 self-employed workers in the UK, one in five (19%) reported poor financial management of processes like expenses has nearly put them out of business, according to research by online accounting software company Intuit QuickBooks.
The research revealed the UK is seeing a significant upturn in workers leaving salaried jobs and becoming self-employed, with 4.6 million self-employed workers recorded in 2016.
But with three quarters (75%) of the UK’s self-employed workforce using the same bank account for personal and business income, many are damaging their chances of success by wasting time untangling business expenses from day to day personal expenditure.
Dominic Allon, vice president and managing director, Intuit Europe said: “When people make the decision to become self-employed, they often focus on their idea, how to monetise it and the prospect of growing it into something brilliant. The reality of managing the business’s finances can be an afterthought when compared with the complexities of getting a plan off the ground.
“Our research shows how damaging this approach can be. 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.”
The research also found that not having a predictable income (58%) and the uncertainty of the future (44%) were the most frequently reported challenges.
However, further concern around the work/life balance was identified, with nearly one in four (23%) saying setting boundaries to stop work becoming a 24/7 commitment was a challenge, and 14% cited managing and scheduling life effectively as a concern.
Mr. Allon added: “We still see many self-employed manually tracking expenses on paper or spreadsheets, which is shocking when we know that adopting modern apps to manage their finances could save them 15 working days a year. That is why we create solutions like QuickBooks Self-Employed, which solve this very specific need of untangling business and personal finances, to help more businesses succeed.”