Why SMEs Need an Accountant
Why SMEs Need an Accountant
According to Taxing Times, a new report from the Federation of Small Businesses (FSB), the average UK small business spends three working weeks a year on tax compliance. If you’re a SMEs business owner, isn’t it time you gave yourself a break?
Time-Consuming Taxes
The report found that SMEs businesses consider Value Added Tax (VAT), Pay as You Earn (PAYE) and Employer National Insurance Contributions (NICs) to be the most time-consuming taxes to handle, spending an average of 95 hours a year complying with just these three.
46% of small businesses said that figuring out the tax rates at which they’re required to pay is a challenge, and 40% find tax exemptions confusing.
Given the complex nature of these taxes and the fines involved for incorrect compliance and late submission and payment, and it’s not surprising that 77% of SMEs said they pay a specialist to ensure their taxes are paid correctly.
Mike Cherry, FSB National Chairman, said: “Small firms by and large understand a tax like VAT, for example, but the sheer complexity of VAT administration means they spend 44 hours a year filing returns.”
Missing Out on Tax Relief
The Taxing Times report also revealed that 55% of small firms are not aware of tax reliefs available to them. More than seven in ten hadn’t made use of, or even heard of, the business rates relief offered to those based in Enterprise Zones or the Enhanced Capital Allowance, which encourages investment in clean technologies. These relief are among several that have a very low uptake among small businesses.
However, 78% were aware of or had claimed small business rates relief, and 66% were aware of or had claimed standard capital allowances. Just over half were aware of the dividend allowance.
“There are lots of useful tax reliefs out there, but many small firms simply don’t know they exist or don’t have the expertise to access them,” said Mike Chery. “Again, user experience is an issue. Lots of firms actually employ consultancies to help them apply for R&D tax credits, for example.”
“There needs to be a real push from local and central government to ensure small firms are aware of all the reliefs available… If we get the small firms that account for 99 per cent of the business population accessing these incentives, we’ll be on the way to the incremental output gains that are critical to closing our productivity gap.”
Don’t Stress Out or Miss Out: Get an Accountant!
Tax compliance and tax rates are complex areas best left to an expert. Rather than spending hours on your tax compliance and still being unsure whether you’ve claimed for everything you can, filled in tax returns correctly and paid the right amount of Employer National Insurance Contributions, leave it to an expert – and give yourself more time to do what you’re best at, running your business.
“Time and money spent by small businesses on navigating the tax system is time and money not spent on innovating, expanding and creating jobs,” warns Mike Cherry.
An accountant will flag up all the tax reliefs you’re entitled to and ensure all expenses you can claim against your tax are submitted. Often, this means an accountant can save you money by making sure you keep and receive every penny you’re entitled to – not to mention the cost of the working hours you’ll gain back! They will take responsibility for filing all tax returns correctly and on time and will also handle any communication with HMRC.
