Europe in 'regulation cut for small firms' shocker

No, your eyes haven't deceived you: the EU has agreed to cut bureaucracy - albeit only for the smallest businesses...

by Emma Haslett
Last Updated: 06 Nov 2012
Accounting: the very thought of hours of fiddly sums can ruin a business owner’s day. But now the EU may have come up with a way to do away with some of the more complex bits of accounting – for smaller businesses, at least. Yesterday, business minister Ed Davey said EU ministers had agreed on new accounting rules that will slash the amount of bureaucracy with which small businesses have to contend when they’re filing their reports with Companies House. The EU? Cutting regulation? What are the chances…

According to Davey, the agreement means EU member states will be able to make the  smallest businesses exempt from certain rules regarding profit and loss account and balance sheet reporting requirements. Businesses will still need to file some balance sheet information with Companies House, of course – albeit heavily simplified. And it will all be at the state’s discretion – so in theory, the Government could decide not to adopt the rules at all. But that’s highly unlikely, given the Coalition is trying so hard to slash the amount of red tape for SMEs at the moment.

So how do you know if you fall into the right category? The new rules will apparently apply to ‘micro-entities’ (well, the EU has to put its mark on something – it might as well be the terminology). That’s any business that has no more than two of the following: a balance sheet total of €250k (that’s £217k) or less; a net turnover of €500k; and/ or an average of 10 employees during the financial year at issue.

After a year of campaigns by businesses to kick-start the Government’s promises to take drastic action on regulation, it would be a surprise to say the least if one of the most useful measures emanated from the much-maligned EU. Davey, though, preferred to position it as a collaborative thing, suggesting ‘this shows what can be achieved by a positive and constructive engagement with the European Union’. The Government and the EU joining forces to make life easier for small firms? We’ll believe it when we see it…

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