Entrepreneurs most likely to underestimate accountancy fees, survey shows
Entrepreneurs are most likely to underestimate accountancy fees when it comes to costs, according to a study from business services company Geniac.
The study looked at the costs involved with running a business and identified the most expensive areas for starting up a business.
The study found that the average start-up company invests £22,756 during its first year to cover costs such as accountancy fees, HR, legal services and company formation, with accountancy being the cost that is the most underestimated.
London was identified as the most expensive area to start a business, with the average business in the city spending more than £30,000 on essential business administration costs in its first year.
The North of England was identified as the second most expensive area, with businesses spending a third more than those in the South East. Businesses operating in Wales were found to spend £8,096.
The study also showed that businesses end up paying unexpected costs, which has led to 23 per cent experiencing profit losses, 21 per cent being forced to reset growth targets, and 7 per cent having to reduce their workforce in order to save money.
Discussing the findings, Geniac co-founder Mike Galvin said that it is concerning that start-ups and small businesses are not only losing profits and their staff but also that they are having to readjust growth plans as a result of underestimating the cost of starting up a business.
He stated that it is “even more worrying” that businesses are over-paying in almost every area of business administration in almost every part of the country.
Galvin added that Geniac is “on a mission to make sure entrepreneurs and business owners don’t waste unnecessary time or money on business administration.”