Financial and corporate reporting is a hugely time consuming affair for a company of any size. But company compliance with financial reporting is particularly difficult for smaller businesses with fewer in-house resources to assist with this function. Here, corporate governance experts London Registrars (https://www.london-registrars.co.uk/) looks at a government-led discussion paper which proposes to cut this form of red tape for small businesses.
A recently published discussion paper from the Department for Business, Innovation and Skills (BIS) and the Financial Reporting Council (FRC) proposes reducing the financial reporting burdens for the smallest businesses in the UK. The paper, entitled “Simpler Reporting for Smaller Businesses”, encourages a simplification of financial and corporate reporting requirements for small businesses. According to the proposals, company compliance for the smallest of businesses, or ‘micro-entities’ would be made easier by allowing them to file a simplified Trading Statement instead of a full Profit and Loss account, as well as a simplified Statement of Position and Annual Return. There is also talk of developing an integrated software package which could help businesses prepare their financial data.
The Minister responsible for corporate governance, Edward Davey said: “Reducing unnecessary regulatory burdens on the smallest businesses can give them the freedom to innovate and grow – which ultimately benefits the entire economy”. The government will glean the reaction to these proposals before deciding on any potential policy change. Given that a micro-entity is defined as a company with a turnover of less than £440,000, with net assets of less than £220,000 and employing fewer than 10 people, which represents around 60% of companies registered at Companies House, it’s thought that implementing these changes could benefit as many as 5 million businesses in the UK.
Indeed, cutting the red tape of financial reporting could affect many clients of corporate support and company secretarial services firm London Registrars. The company is keeping a close eye on developments and will advise its clients accordingly. For further information on the services provided by London Registrars visit the company website at https://www.london-registrars.co.uk/.