Half of UK entrepreneurs don’t believe Covid-19 and the cost of living crisis have impacted business
Nearly half (48.2%) of UK entrepreneurs believe that Covid-19 and cost of living has had little impact on their businesses according to new research from cloud accounting providers for small businesses, and accountants, FreeAgent.
The research analysed the main issues and top trends impacting small businesses and accountants, revealing that many UK businesses are hopeful they can survive the next year. 70% don’t believe they will need to seek extra funding to protect their business in the next 12 months; despite increasing costs, pressures and political uncertainty.
FreeAgent’s research also found that 43% of respondents think their business will perform about the same as it has over the past 12 months, compared to 28% who believe business will do better than it has over the past 12 months, highlighting hope and resilience within the small business community.
What’s needed from the government?
Given the fact small businesses account for 99.9% of the business population in the UK, there is a clear need for greater government support so they can navigate this period of political uncertainty and looming recession.
Top suggestions for supporting small businesses include:
- Lowering of business taxes for freelancers and small businesses (72%)
- Greater crackdown on tax evasion/ avoidance of multinational businesses (68%)
- Introduction of more statutory protection for self-employed e.g. pensions, sick leave, maternity pay (46%)
- More financial aid/incentives for people starting a business (36%)
- Scrapping IR35 – or “off-payroll” – legislation (35%)
The impact of Brexit on accountancy and small businesses
Another big issue that continues to impact small businesses is Brexit. Analysis of the impact of Brexit on the UK’s small business/enterprise community showed that SMEs are divided in how they view the impact of the UK’s withdrawal from the EU.
A majority (52%) of the small business community thinks the UK should rejoin the European Single Market and EU Customs Union. However, the division in opinion is highlighted with more than 2 in 5 (44%) believing their business has not been affected by Brexit in any way compared to almost a third (31%) who think Brexit has negatively impacted their business.
Doubling down on essential accounting services
The research also highlights the most valuable services businesses need from their accountants and bookkeepers, including:
- Completing/submitting VAT returns, tax returns and accounts to the right authorities at the right time (70%)
- Dealing directly with HMRC (56%)
- Reviewing and correcting mistakes (43%)
However, the accountancy profession appears to have remained static when it comes to issues such as Brexit, Covid-19 and the cost-of-living crisis – with 68% of respondents saying that the services provided by their accountant have not changed or evolved over the past two years. With a recession expected to impact the UK in the near future it’s likely that accountants will need to better evaluate the needs of their clients and tailor their services to meet these requirements if they want to remain competitive in the current climate.
Roan Lavery, CEO and co-founder of FreeAgent said, “Our research shows that in spite of rising inflation, the cost of living crisis and political instability, the small business and accounting community is hopeful that they will survive the challenges over the coming months.
“But although many SMEs are hopeful of surviving the impact of the recession, inflation and cost of living, it’s also clear that these businesses want more support. Specifically, they would like to see lower taxes and an introduction of more statutory protection for the self-employed.
“We therefore call upon the next prime minister and chancellor to prioritise alleviating the financial burdens for setting up new businesses and increasing support for the small business sector. And, above all, we urge the government to listen to what business owners want and need.
“Small businesses are the backbone of the economy. The more help we can provide to smaller businesses now, the quicker they will be able to drive the UK’s recovery in the future.”