Here at FreeAgent, we always like to hear from small business owners and freelancers about what it’s *really* like to be self-employed in modern Britain.
Whether it’s the struggle to keep their cashflow healthy, the excitement of expanding into new sectors or simply the enjoyment of having a flexible working life, it’s fascinating to see what life as a small business owner looks like and what the main challenges are.
Earlier this year, we asked our customers to answer a few questions in our latest Small Business Monitor survey. More than 500 people replied, weighing in on everything from tax and government legislation through to Brexit, late payment and holidays.
Here are some of the common themes we uncovered.
Most small business owners aren’t confident about Brexit
With less than a year-and-a-half to go until the UK exits the European Union, we asked people what they thought about the Brexit process and its potential impact on the economy. The results were far from positive.
70% of respondents said they thought that Brexit would have a negative impact on the economy, while just 10% said they thought it would have a positive effect. Many small business owners felt that the sting would be felt sooner rather than later - with half (50%) saying they thought that the economy would get worse over the next 6 months.
Many are still unclear about digital tax
Making Tax Digital (MTD) is a flagship proposal by the government to fully digitise tax and essentially put an end to the traditional tax return. Under the current proposals, by April 2019 all small businesses above the VAT threshold and within the scope of MTD will have to keep digital records for VAT purposes and provide VAT return information through MTD-compatible software.
However, many small business owners still remain unsure about the plans. Only 36% of respondents said they felt positive about MTD, while 17% said they felt negatively and 27% said they didn’t know how they felt about it. Perhaps most surprisingly, around one in five (19%) people admitted that they didn’t actually know what MTD was. We’ve written a range of guides and articles to help small business owners get to grips with the initiative - so if you’re unsure what MTD involves or would like to brush up on your knowledge, head over to our dedicated resources area.
Small business owners are disheartened by the UK tax system
Small businesses may have been lauded by the Prime Minister as the backbone of the economy, but it’s clear that these positive vibes are not entirely reciprocal. Our Small Business Monitor found that two thirds (65%) of respondents felt that the government does not provide enough support to businesses like theirs, while just 11% said they thought it did.
Furthermore, the majority of respondents also showed displeasure with the UK tax system, with 72% saying that they felt it was too complicated for small businesses and 78% saying they believed it benefitted larger businesses rather than smaller ones.
They work long hours - and often through sickness
Running a small business can be tough work, but our research revealed just how hard it can be. We asked business owners how long they spent working on their ventures per week and nearly a third (30%) said that they spent 48 hours or more - the maximum weekly limit set by the EU - on their businesses. This included 5% who said their business took up 64 hours or more of their time each week!
Combined with these long hours, we also found that many small business owners may be risking their health by not taking any sick leave. An overwhelming 82% of respondents said that they had worked through an illness because they did not feel they could afford to take any time off from their business.
Late payment remains a massive issue
The Small Business Monitor painted a stark picture of the late payment issue that continues to plague the UK. Only 3% of respondents told us that they had never had a late-paying client; while one in ten (10%) said that they had experienced a client who had never paid them at all. Meanwhile, nearly a fifth (19%) said they had taken legal action against a non-paying client.
Few people appeared to have confidence that the problem would be solved in the near future. 57% of respondents said that despite the recent appointment of a Small Business Commissioner to tackle late payment, they did not think the government was taking the issue seriously enough.