Many small businesses in the UK are already planning for Brexit. Whether it happens on 29 March as planned, or there is a delay on Article 50.
At the time of writing, the Government is renegotiating the deal put forward by the Prime Minister. The possibility of a ‘no-deal’ Brexit is on the table, as far as it’s possible to ascertain. And of all of the Brexit possibilities, a no-deal scenario is the most difficult to prepare for.
Small businesses should prepare for changes
In many ways, planning for Brexit is the same as making any other business decision. It’s about managing risk, and all small business owners are familiar with planning for the unknown.
While Brexit is a new scenario for small business owners to deal with, there is no reason why steps can’t be taken to manage the risk. You should be aiming to make changes that have the largest possible benefit at the lowest possible cost. Recent research shows that 4% of 130 small businesses surveyed have started Brexit planning, and 80% have not yet made any changes.
‘Wait and see’ may well be enough for many small businesses, particularly those not involved with trading with countries within the EU, but proactive steps to manage potential risks is always a good idea.
Simple steps to take
Small business owners should consider Brexit in the same way they do any other time of uncertainty. It’s important to reassure suppliers, clients and employees that it’s business as usual for the most part. While there may be some changes and possible delays, all businesses in the UK are working to make sure they run as usual.
Assessing which business activities might be impacted by a no-deal Brexit is the next stage. Businesses should begin by understanding the different types of sales and purchases they make and learn the physical and legal flow of trade. A no deal Brexit is likely to include a customs border creating between the UK and other countries. Therefore, businesses that trade in goods will be most affected, and can expect changes to importing and exporting processes and a possible increase in VAT and customs duty.
Service businesses are likely to be more affected by access to the labour market and regulatory changes. It’s a good idea to plan future employee needs in order to work out how much freedom of movement could affect it.
Five actions small businesses can take now to prepare for a no-deal Brexit
- Learn the impact of likely regulatory changes
Will you still be able to sell your services and goods in the EU and vice versa? If not, find out Government advice on what you can do about it. It’s possible that an EU presence will be needed to satisfy regulatory requirements.
- Think about incorporating an EU company
This is easier and cheaper than you might think. Ireland will be the largest English-speaking country within the EU post-Brexit. Having a subsidiary or overseas office there or in another EU country will mean your business has a legal presence within the bloc. If you go down this route, consider how this will affect the infrastructure of your business.
- Open a bank account in the EU
In the short term, it could be useful to have a bank account within the EU. Opening it now will mean you’re ahead of a potential rush to do so after Brexit and could save hassle down the road.
- Apply for an importer reference number
As the UK is currently part of the Customs Union, businesses don’t need to ‘import’ goods. A no deal Brexit would change this, and the UK will need to import and export goods with the EU. This means your business will need an EORI (importer reference) number.
- Check workforce needs against your business plan
If your business employs lots of EU workers and you’re expecting numbers to drop, how will you deal with the deficit? Consider apprenticeship schemes and how you will source employees.
James Turner, Managing Director of Turner Little Limited says: “The key for small businesses in preparing for a no-deal Brexit is to remain calm, take a ‘business as usual’ approach, but ensure sensible steps are taken to mitigate potential problems. A no-deal Brexit is difficult to prepare for, but while we wait for clarity from the Government, it is important to start preparing now. For those UK based companies trading with the EU, either selling there or sourcing product from there, the suggestion of incorporating an Irish company is both sensible and relatively inexpensive.
The leave date of 29 March 2019 is fast approaching, and while there may be a possibility that Article 50 will be extended, we just don’t know. In the meantime, making adequate plans for importing and exporting and ensuring workforce numbers can be retained remain the most important steps for small businesses. Those companies that don’t rely on importing from or exporting to the EU may find that the impact is negligible, but for those that do, following this advice could make the transition out of the Customs Union easier. Brexit should be seen as an opportunity for small businesses in the UK, as we stand at the cusp of a new era for the country.”
About Turner Little
Founded in 1998 in Yorkshire, UK, Turner Little is a specialist UK and offshore company formation, banking and corporate services provider. Our services include company formation, UK and offshore banking, asset protection, credit correction, trademarking and trusts. Other services include Internet services, mail forwarding, wills and probate. Turner Little’s vision is to offer the best possible service, together with market leading products.