At the first level, small business owners are expected to prepare VAT, PAYE and National Insurance documents that are time consuming and costly: owners could put their time into something more constructive for the business. At present, the government has cut some red tape for small businesses by allowing VAT returns and PAYE to be prepared over longer periods i.e. quarterly, not monthly. Further, if businesses have registered, VAT is only paid on those invoices where money has been collected. Abbreviated accounts can also be prepared by small businesses so that the costs of preparing accounts are reduced and that valuable time can be put into other areas of the business.

Although this policy has given businesses a partial opt out from red tape, it is still not enough to take the pressure off red tape duties as even the smallest of businesses almost reach the need for extra administrative help (bookkeepers, etc). This would further add to the costs of red tape, but as some businesses cannot provide for extra employees the responsibility remains in the hands of the business owner. If the business owner is the only placed source for dealing with a red tape issue, then as long as the government ensures that the legislation has been planned and can be initiated in the most efficient and effective way, then the business would have to accept the responsibility for that piece of legislative administration. This would further assume that any direct costs were not passed onto the business.

At another level, small businesses are still required to provide administration for maternity pay, sick pay and tax credits. Student loan repayments are also a responsibility for business owners to administer and consequently it costs the business community a total of about £50 Million each year to do so.

The latest red tape burden is pensions: for those small businesses with five employees or over, legislation dictates for a stakeholder pension scheme to be provided. The business does not suffer any costs from providing a pension scheme but the costs of administrating the scheme can be demanding and time consuming. Once again, the responsibility of providing the scheme lies firmly with the business owner. At present, about half the companies that should have a stakeholder pension in place have not done so.

Article Index

1. Introduction
2. Red Tape For The Self-employed