There are aspects of running a business many entrepreneurs would prefer to avoid, but they have to be done by someone. For example, 86% of small business owners take on at least one financial activity for their small businesses, according to a recent survey from QuickBooks and Kelton Global. Most (80%) business owners do this because they believe “they’re the best people to manage their finances with the best level of accuracy.”
But the truth is, taking on these financial tasks themselves costs entrepreneurs time and money—and leaves them open to run-ins with the Internal Revenue Service (IRS). Not to mention the cost of missed opportunities.
Are you micromanaging payroll?
Take payroll, for example. As business owners, we know that processing employee payroll and calculating payroll taxes accurately is always time consuming and often frustrating. If you get it wrong, it can cost you a lot of money and possibly get you in legal trouble.
The time it takes to do payroll and fear of getting it wrong are two reasons why 65% of small business owners, on average, wish they could completely outsource their payroll process.
Small business owners are always short on time. Imagine what you could accomplish if you had an extra 21 days a year to work on the parts of your business that really matter. Well, according the QuickBooks/Kelton Global survey, that’s how much time business owners would save by outsourcing payroll: 4 hours and 52 minutes every pay period! And what’s more, 63% of small business owners admit they never realized how much time they were spending working on payroll.
Other insights from the survey
Not confident: 33% of small business owners aren’t “comfortable with the payroll process at all.”
It’s hard to keep up: 79% of business owners say it’s hard to stay on top of payroll tax laws. Partly, say 70% of business owners, that’s due to the varying labor laws in different cities and states across the country, which makes doing payroll even harder.
IRS problems: 25% of the small businesses surveyed had problems with the IRS. Of those, 15% were audited and 17% were fined. The bigger small businesses had more problems: 40% of companies with more than 10 employees were audited or fined, compared to 14% of businesses with 10 or less employees.
Getting help: 81% of the small business owners who felt “confident” about the upcoming tax season use software to process employee payroll, and calculate and file payroll taxes.
Increasing cash flow: 72% of small business owners use automated payroll software, and of those, 73% say using the software has helped them “improve cash flow by maximizing deductions and keeping money in the business.”
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Business owners who do calculate their own payroll are not exactly happy with the task, describing it as frustrating (49%), complicated (47%), and confusing (44%). And instead of doing payroll they’d rather be spending time:
- Hanging out with family and friends
- Improving their product or service offerings
- Spending time with customers
- Training their employees
The survey also did a deep dive into what areas of their companies small business owners are most concerned about. The top 5 are (three concerns were tied for fifth place):
- Customer satisfaction—50%
- Cash flow—49%
- Hiring and workforce management—29%
- Day-to-day administrative tasks—27%
- Government policies & regulations—27%
- Social media & marketing—27%
What financial concerns keeps small business owners up at night? The top 5 are (two concerns were tied for fifth place):
- Not having enough cash flow to fund my business—37%
- Having to handle all the financial admin/operational tasks myself—31%
- Being unprepared for tax season—25%
- Having to pay extra taxes due to lack of knowledge about deductions—22%
- Not being able to hire the right people for finance/accounting jobs—16%
- Missing deadlines for payments—16%
A lucky 23% said there are no financial issues keeping them up at night!
Published at Mon, 23 Mar 2020 19:04:17 +0000