The Government has given the go-ahead to measures designed to exempt micro businesses from having to file a profit and loss account with Companies House.
The rule, which will apply to financial years ending on or after September 30th 2013, means that the UK’s smallest firms will be able to draw up an abridged balance sheet and profit and loss account instead.
The measures have been implemented following a consultation that found the existing accounting requirements for firms were far too onerous for the smallest of traders. 1.5 million of the country’s smallest companies could see their administrative burdens eased as a result.
Jo Swinson, Business Minister, said: "Thriving micro-businesses are a vital ingredient for a stronger economy. However, because of their size they don’t always have dedicated finance teams behind them.
"We therefore need to make sure that they can focus on growing their business – rather than completing unnecessarily detailed paperwork.
"The measures announced today are just one of the ways we’re cutting bureaucracy, letting micro-businesses get on with running their enterprises and creating jobs."
In order for micro firms to be eligible for the administrative exemption, which is entirely voluntary, a trader’s company must have 10 employees or fewer, and show a balance sheet under £316,000, with new turnover of £632,000 or below.
However, despite the government’s claim to be cutting red tape for the smallest companies, nine out of 10 businesses believe that the UK’s regulatory environment has not improved in the last year.
New data from the Institute of Chartered Accountants in England and Wales (ICAEW) revealed that 70 per cent of firms are unfamiliar with the state’s ‘one in, two out’ policy, which means only one rule should be introduced for every two that are removed.
Nevertheless, just 13 per cent of those familiar with the policy are confident it will help to reduce the regulatory burden on their own business, suggesting the vast majority of firms do not expect it to succeed.
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