Taxation Putting Pressure on Small Businesses -
Top Ten SME Issues in 2007
As someone who is
involved with a small business, you are
probably aware of the pressure caused by
business taxation; and the large amount of
time and effort it requires to deal with.
Business taxation has
topped the list of concerns for
small to medium sized businesses
(SMEs) according to specialist insurer
Hiscox’s second annual SME Risk Barometer,
which measures the top ten business concerns
for
UK SMEs. Amid growing concerns that
the recent decision to increase capital
gains tax will have a negative impact on SME
owners, four out of five of the SMEs
surveyed are already citing the burden of
taxation as their top worry.
John Heaney, UK
Speciality Commercial Underwriting Manager
at Hiscox said: “Obviously CGT is a hot
topic for SME owners right now. The ending
of taper relief and the increase in CGT is a
potential hindrance to entrepreneurial
endeavour. Our research shows an anxiety by
small business owners towards taxation in
general. The cost of running a business has
increased, reflected in rising local
business rates and the increasing compliance
cost of tax regulation.
“Overall, the Risk
Barometer shows that 40% of SMEs’ top
concerns are issues unrelated to their core
business activities.”
SME’s are feeling the
effect of today’s challenging economic
environment. Pressure to increase sales has
shot from fifth to second place in the poll,
while the effect of the economy on business
was a worry for three quarters of the SMEs
polled. Worries around cashflow have also
increased and are now ranked the sixth top
concern, compared with ninth place in 2006.
Linked to cashflow, clients refusing to pay
also featured in the top ten concerns for
the first time.
In 2006, at a time of
sharp rises in energy prices, increasing
energy and rent costs topped the list of SME
concerns. However, it seems small businesses
have more pressing concerns in 2007 as
rising energy prices have dropped to fourth
in the poll.
Heaney continues: “As
the economy starts to slow down, our
research shows that SMEs are feeling the
heat from a wider range of risks than last
year, with cashflow a key concern and
clients refusing to pay entering the top ten
for the first time. In addition, the
pressure to expand – with all its associated
risks – to keep up with customer demand and
maintain profitability is also weighing
heavily on the minds of those running small
businesses.”
|
2007 RANK |
Top 10 CONCERNS IN 2007 |
2006 RANK |
|
1 |
Business taxation such as local
business rates, VAT and national
insurance (80%) |
2 |
|
2 |
Increasing sales or winning new
business (76%) |
5 |
|
3 |
The effect of the economy on the
business (75%) |
3 |
|
4 |
Rising costs such as energy or
rent (74%) |
1 |
|
5 |
Paperwork/regulation (73%) |
4 |
|
=6 |
Competition (68%) |
6 |
|
=6 |
Cashflow (68%) |
9 |
|
8 |
Compliance with UK company law
(66%) |
7 |
|
=9 |
Technology malfunction (61%) |
8 |
|
=9 |
A client or clients refusing to
pay (61%) |
N/A |
Small and medium sized
businesses may be finding it difficult to
keep on top of the many different challenges
they face, but the Hiscox’s 2007 Risk
Barometer indicates they know how important
it is to ensure nothing slips. More than
half of SMEs (51%) admitted to spending more
time looking at risk management issues than
they did two years ago.
Find out more on taxation issues in our
Accounting portal
| 
