In Brussels yesterday, the EU came to an agreement to cut red tape for ‘micro-entities’ during a meeting of business ministers from across Europe. The move could see very small businesses being excused from the burden of certain accounting regulations. By being exempt from these regulations, firms will save money that could be used elsewhere, such as expanding to become a bigger company.
‘Micro-entities’ is a term created at the agreement to describe very small businesses. To be a micro-entity a company must not exceed two of the three criteria’s, which are:
- a balance sheet total of €250,000 (£217,000)
- a net turnover of €500,000 (£434,000)
- an average of 10 employees during the financial year in question
The rules for the profit and loss account and balance sheet reporting requirements have been simplified by the agreement. This allows EU member states the discretion to exempt the smallest companies from filing these accounts. However, simplified balance sheet information would still need to be filed at Companies House.
Business minister Ed Davey said the agreement could save firms as much as £300 million a year. Mr Davey said: “This is a significant step in reducing red tape and a clear signal that we will take action to stop our smallest companies being held back by excessive regulation.
“I believe this shows what can be achieved by a positive and constructive engagement with the European Union. We now need to build on this breakthrough and I hope that further improvements can be agreed before the proposal becomes law."
This a good move for the UK’s very small firms and it shows that the EU have recognised how much of a burden unnecessary regulations are on struggling small firms.
For more information, please visit www.glazers.co.uk
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