The 6th December pre-Budget Report (PBR) contained few surprises for the small-business sector. As expected, education emerged as a key priority. There are no short-term fixes, but any success in this area will be of huge benefit to business – there is mounting concern about the lack of basic skills among job applicants.
One of the big PBR stories as far as the SME sector is concerned related to a change that didn’t occur. Business representative groups had expressed hope that the Chancellor would take steps to reduce the complexity of the tax system, and that he would cut the rate of corporation tax businesses pay. These changes weren’t forthcoming.
Among the measures that were announced, those likely to impact on SMEs include the following:
- an increase of 1.25p per litre in fuel duty.
- a fast-track system to help small companies protect their trade marks.
- a clampdown on businesses paying less than the minimum wage rate.
- changes to the way managed-service companies are taxed (full rates of employed tax and NI will now be payable)
- a tightening of VAT record-keeping requirements for both buyer and seller when a business is sold.
The Chancellor also confirmed that a new Construction Industry Scheme (CIS) will take effect in April next year. The revised CIS is intended to reduce the regulatory burden on those using it, while continuing to ensure that all tax obligations are complied with.
For more information, you can visit the PBR 2006 section of the Treasury website
Q: Are there any forthcoming legal changes I need to be aware of?
A: There will always be a few regulatory changes in the pipeline, so it pays to keep an eye on developments at all times. The main changes that will affect most businesses over the coming months include:
- New rules, to be announced in January, that will apply to Romanian and Bulgarian citizens wishing to work in the UK when their countries join the EU in 2007
- the extension from 6 April 2007 of maternity and adoption leave from six months to nine months
- the extension, also from April 6 2007, of the right to request flexible working to cover carers of elderly or sick relatives
- a widening of the scope of rules requiring employees to inform and consult with their employees – all businesses with 100 or more employees will be included from 6 April 2007
- the introduction of a smoking ban in almost all workplaces from 1 July 2007.
Meetings are a crucial part of most working schedules, but there are few of us who feel we make the most of them. New research from Bibby Financial Services puts the problem in perspective. As many as 42 per cent of entrepreneurs think that more than half the time they spend in meetings is unproductive.
Alarmingly, Bibby calculates the aggregate cost of all this dead time as being worth £25 million each year. The most commonly cited downfalls for meetings are:
- failing to stick to the agenda
- colleagues being unprepared
- disruptions from outside the meeting room.
So what’s the solution? It sounds obvious, but it’s a matter of holding fewer meetings. Owners and senior managers need to have the confidence not to get bogged down in internal meetings.
Instead, you should delegate well and let people get on with things. Your time is better spent focusing on the bigger picture rather than micro-managing everything in an endless round of meetings.
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Managing your time
It’s well established that a great deal more men than women set up in business. According to recent research commissioned by business-support group Prowess, 8.1 per cent of men were involved in running their own business last year, compared with 3.8 per cent of women. (The gap is even greater among young people – male entrepreneurship is four times higher than female in the 18-24 age bracket.)
However, the Prowess research makes the point that it’s important to look beyond these average figures. When you break the figures down it becomes clear that there is a lot of vibrant female entrepreneurial activity out there. For example, black women of African origin are four and a half times more likely than white women to be entrepreneurs. And women in rural areas are almost twice as likely to be entrepreneurs as those in urban areas.
The rising level of female enterprise in rural areas challenges a range of stereotypes. Many women setting up in business in the countryside are turning to technology to develop business ideas to fill the gaps that have emerged with the decline of the agricultural sector. It turns out that twice as many women as men set up new businesses based around the newest of technologies (ie less than one year old).
Despite its length (1,300 sections no less), one of the main aims of the new Companies Act, which became law in November, is to streamline the rules and procedures involved in setting up and running a business.
The Government estimates that the Act will lead to savings for the small-business sector totalling £100m. This will be down to efficiencies created by changes such as:
- the removal of the requirement for companies to appoint a company secretary or to hold AGMs
- the introduction of new model articles for companies that better reflect the way modern businesses operate
- easing the financial rules for companies purchasing their own shares.
You should note, however, that the Act also introduces some new obligations, particularly for company directors. While the key duty of the directors to act in the shareholders’ interest is restated, the Act notes that attention should also be paid to the interests of employees, suppliers, consumers and the environment.
In addition, the Act introduces a new criminal offence of knowingly including false or misleading details in an audit report.
The Act’s provisions will be introduced gradually, but all will be in effect by October 2008.
Find out more about Company Directors’ responsibilities