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Are micro-businesses to be freed from some onerous red tape?

Are micro-businesses to be freed from some onerous red tape?

You may be relieved to learn that the European Council has agreed new requirements to reduce bureaucracy and create a less burdensome accounting and reporting system for micro-businesses.

The new regulations will cut dramatically the administrative burden on companies that meet two out of the following three criteria. Their balance sheet should not exceed £293,000, turnover should be £586,000 or less and the company should not employ more than an average 10 members of staff during the course of a financial year.

This new EU directive means that member states can exempt their micro-businesses from the burden of publishing annual accounts.

The financial reporting faculty chief at the ICAEW, Dr Nigel Sleigh-Johnson, said the move was a long-awaited step towards devising an appropriate system for small business reporting. Micro-businesses make a substantial contribution to the UK’s economy and are a key source of innovation and start-up activity. The ICAEW strongly supports any move to reduce the regulatory burden on such businesses.

However, he went on to point out that any changes to reporting requirements should not reduce access to financial information nor give out the impression that sound financial management was not important.

The UK now has a free rein to decide what rules micro-businesses should follow and now could be a good time to design a reporting regime suitable for all small businesses. This has been debated a lot in the past but there is still a lot of very important work to be done before the system can be deemed fit for purpose, he added.

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Image: Westminster Council House tied up in red tape by Department for Communities and Local Government

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