Staff Writer AccountingWEB
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Small business fears Brexit knock-on

A survey of more than 1,000 small business owners has unearthed overwhelming uncertainty and concern over the negative impacts Brexit will have on them. Surprisingly, a majority also favoured making late payment a corporate criminal offence.

21st Oct 2019
Staff Writer AccountingWEB
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FreeAgent's Time for Change survey
FreeAgent - TimeforChange

Recent research has found that 61% of small business owners believe Brexit will have a negative impact on the economy. Despite not knowing what will happen, a majority of respondents stated that they just wanted to ‘get it done’.

The Time for Change study, conducted by accounting software vendor FreeAgent, found that the level of disruption created by Brexit uncertainty was having the greatest impact on small businesses.

Speaking to AccountingWEB about the survey, FreeAgent CEO Ed Molyneux said that Brexit means “nothing is being sorted” as the government doesn’t currently have the means to focus on other areas that could help small businesses.

While Molyneux expected negative responses to the survey’s Brexit questions, he said that the point of the exercise to raise key issues “that aren’t given enough precedence”.

                        

Impact of Brexit on economy
FreeAgent - Time for Change

Late payments: A corporate criminal offence?

One of the most striking results from the survey was that 55% of small business owners believe late payments should be treated as seriously as corporate crimes, leading to potential prison sentences. But the reaction may be justified, considering how these payments often dictate whether a small business stays afloat. 
 

          

Late payments as corporate crimes
FreeAgent - Time for Change

A meagre 7% of respondents claim to never experienced issues with late-paying customers.

“Small businesses have zero clout with big businesses,'' said Ed Molyneux, which according to the FreeAgent chief demonstrates a “real asymmetry of power” regarding prompt payments. 

However, Molyneux did point out some legislative progress in this field, with the government’s introduction of new payment performance regulations forcing large companies to be more transparent with their payments.

The mental health issue

Mental health was another area of concern raised by the survey, with an alarming 51% of small business owners experiencing burnout as a result of overworking. Molyneux identifies it as “a big issue, especially in the early days for small businesses,” where businesses are essentially on pause when leave is taken. 

                 

Percentage experiencing burnout
FreeAgent - Time for Change

New businesses start out “because they want the freedom,” but being alone means the responsibility is continual. This pressure is reflected in the minuscule 6% of those surveyed who believe that adequate mental health support is available to them.

Lack of support in the current climate

Despite the rising number of new businesses starting out, the government is providing little support, with an alarming 1% being funded with any form of a grant. The lack of protection or benefits for self-employed people, such as sick, holiday and redundancy pay, demonstrates a systematic failure from the government towards new startups. 

                  

Small business startup funding
FreeAgent - Time for Change

A concerning 58% believe the UK tax system is geared up to favour large businesses. The government needs to “create a fair tax system that taxes people the same, irrespective of their situation,” said FreeAgent’s CEO. 

New legislation, as we have seen with the upcoming off-payroll (IR35) rules, is “not fair for those people on their own” as it leaves individuals unclear on their status in self-employment, and ultimately demonstrates how the odds are stacked against them. What is needed is “a fair tax system that taxes people the same, irrespective of their situation.”

                            

UK tax system not designed to benefit small businesses
FreeAgent - Time for Change
 

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