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Financial Reporting Rules Relaxed For Micro-Businesses

Financial Reporting Rules Relaxed For Micro-Businesses

Micro-businesses will be allowed to publish much smaller financial statements as part of measures to cut unnecessary red tape. Business Minister Jo Swinson announced the changes, which follow a consultation on how to best implement the EU’s Micros Directive. As part of the announcement, the 1.5 million micro-businesses in the UK – defined as having fewer than 10 employees – will become exempt from certain financial reporting restrictions, having previously been treated in the same way as other small companies.

The consultation found that the amount of accounting paperwork micro-businesses were having to do was putting an unnecessary strain on them relative to their size. As part of the changes to the law, the companies will be able to draw up a more concise balance sheet and profit and loss account. They will also no longer have to file a profit and loss account with Companies House. Micro-firms and start-ups seeking advice on the new reforms are urged to speak to law firms in west London to gain best practice guidance on meeting the new company financial reporting requirements.

Business Minister Jo Swinson said the new measures were designed to cut bureaucracy and give micro-businesses a better chance to make money and create jobs. She 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 changes will apply to financial years ending on, or after, 30 September 2013 and related accounts filed on, or after, the date on which the changes come into force.

Our team of corporate and commercial solicitors can provide advice on changes to reporting rules. Contact a member of the team on 01895 207973 or email corporate@ibblaw.co.uk.