More than 200,000 small businesses in the UK have taken advantage of the Streamlined Company Registration Service, since its launch. The strong uptake of the service shows how much it was needed, given the challenges faced by small business owners.
While words used to describe UK SMEs tend towards ‘agile’, ‘disruptive’ and ‘innovative’, many small business owners find themselves increasingly slowed down by bureaucratic red tape. Statistics show that small businesses spend around 70 hours per month dealing with form filling, tax and registration. All of which eats into growth targets and time spent on new ideas.
Small business registration simplified
To combat some of the paperwork needed at the start of the process of setting up a small business, the Streamlined Company Registration Service was introduced.
Launched through collaboration between Companies House and HMRC, the service is designed, ostensibly, to help the burden of administration on new businesses.
Small business registration has always involved registering with Companies House. Since the new service was introduced, small businesses can now register for corporation tax and HMRC’s services as a PAYE tax employer, all at the same time. Traditionally one would set up the company, start trading and then register when HMRC when they employed someone or completed their first-year annual accounts.
The new system is claimed to make it simpler for start-ups and small businesses to ensure they’re legally covered in one process. Prior to the service being launched, small businesses were obliged to send the same information to HMRC and Companies House. This arguably duplicated the work necessary to complete the small business registration process and it was suggested that it left some companies legally vulnerable. One could equally argue that the new system is intended to ‘trap’ everyone setting up a company at day one.
Never been easier
The Financial Secretary to the Treasury, Mel Stride MP would have you believe and has said: “It’s never been easier to set up a business in the UK. Reducing the administrative burden on small businesses is all part of this. HMRC and Companies House are working hard to make business registration and tax easier. Previously, the same information would need to be entered in different platforms to register a company and register for tax, we have simplified that process.” They have but to what purpose?
The Government says that it is committed to delivering a digital, streamlined tax system for every business in the UK. It wants to support all businesses, including UK SMEs, to get their tax correct in order to reduce the amount lost through errors that can be avoided. A more cynical view might be that the Government want to make sure everyone is on a database and their incomes tracked and taxed automatically and at the earliest possible opportunity.
The Industrial Strategy Programme
The simplification of small business registration is part of the Government’s Industrial Strategy. The strategy’s aim is claimed to help UK small business increase their productivity by assisting them to “create good jobs and increase the earning power of people throughout the UK with investment in skills, industries and infrastructure.”
The Government has repeatedly stated that they see UK small businesses as a vital part of the UK economy, particularly as we move ever closer to Brexit. Small Business Minister, Kelly Tolhurst MP, says: “British small businesses, and the entrepreneurial spirit behind them, are the backbone of the UK economy, employing over 16 million people up and down the country.”
By investing in infrastructure, skills and modern industries, the Government says that it is making it easier for UK small businesses to flourish.
Small businesses suffer growing pains
Despite this, many small businesses owners report suffering from stumbling blocks to growth. Research from the British Business Bank canvassed 500 SME directors in England and found a third wanted to grow their business but didn’t know how.
Lack of awareness of alternative financing options particularly stands out as a key problem. Just 5% of the companies asked said they have thought about early-stage equity investment, for example. Only 7% say they considered crowdfunding.
James Turner, Managing Director of Turner Little Limited says: “While Government support to simplify small business registration is acceptable, the sector would benefit from further initiatives. This is particularly the case for finances. Many small business owners are unaware of the right kind of finance to maximise their growth plans. It’s absolutely the case that many find the financial landscape difficult to understand, apparently complex and daunting. This can seriously impede small business growth in the UK as can the ever-increasing burden of red-tape and regulation.
“We even have figures showing that some simply give up. The study by the British Business Bank shows that 27% of small businesses that can’t access the finance they want, simply abandon their growth plans. This clearly shows that there are many ‘black spots’ in the small business process, that need to be addressed by Government initiatives.
“Small businesses are the beating heart of the UK. Figures from the Department for Business, Innovation and Skills show that the country’s 5.7 million small and medium sized businesses form more than 99% of private sector companies. They employ approximately a quarter of the UK’s population and turnover an average of around £2 trillion. More is needed to support this vital sector, in terms of Government backing and through raising awareness of financial options.”
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.