The 1.5 million firms in the UK that qualify as micro-businesses are currently subject to the same accounting rules as other small firms.
However, following a consultation on an EU Directive earlier this year, the first in which micro-entities have been recognised in a deregulatory Directive, the Government realised that keeping them to the same stringent rules as larger small firms was an unfair burden for organisations of their size.
Consequently micro-businesses will be allowed to prepare and publish much reduced financial statements, including an abridged balance sheet and profit and loss account. They will also continue to be exempt from the requirement to file the profit and loss account with Companies House.
Commenting on the decision, the Business Minister, Jo Swinson, said that thriving micro-businesses are a vital ingredient for a stronger economy; however, because of their size they do not always have dedicated finance teams behind them.
She added that the Government realised therefore that it needs to ensure that they can focus on growing their business rather than completing unnecessarily detailed paperwork.
By cutting bureaucracy, she added, and letting micro-businesses get on with running their enterprises and creating jobs, they can continue to make a valuable contribution to economic growth.
The changes will come into force from the end of this month and will apply to financial years ending on or after 30 September 2013 and related accounts on or after the date on which the changes are implemented.
For more information, please contact Glazers, Chartered Accountants in London or visit www.glazers.co.uk
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