Edinburgh Napier University

  In Scotland, there are more than 94% of enterprises which are defined as microbusinesses. Previous studies have thoroughly investigated accounting practices in SME sector internationally in addition to the UK. However, despite the prevalence of microbusinesses in Scotland, there is a lack of literature on the accounting practices and the particular challenges microbusiness face. To fill this gap, this study examines the accounting practices of microbusinesses and their challenges. An in-depth interview technique is used as a method of data collection, where we wanted to understand ‘what’, ‘why’ and ‘how’ in relation to this phenomenon.

Results suggest that the majority of microbusinesses used single entry bookkeeping and cash basis accounting. Furthermore, cost, knowledge of owners, time constraints emerged as key challenges of proper record keeping. In some cases, the calculation of profit and loss does not reflect the actual profit and loss for the business.

Overall, this study provides a number of policy implications. Thus, the Government and non-government agencies can use the information from this research to provide training in relation to accounting practices to microbusiness owners and managers. Training would help microbusinesses more accurately record transactions and hence allow for better decision making.