New rules agreed by the EU could help smaller businesses deal with the amount of admin involved in running their enterprises.
The changes mean that simpler rules would apply to the way that very small companies manage their profit and loss account and balance sheet reporting.
The decision taken by ministers in Brussels would give individual EU member states the ability to exempt the smallest firms from some of the reporting obligations which apply to larger companies. The aim is to lower administrative costs.
A new category of company is to be established for purposes of the exemption, which would see them submitting simplified balance sheet information to Companies House.
Micro-entities, as the category is known, are defined by the agreement as not exceeding two of three qualifying criteria. These are a balance sheet total of £217,000; a net turnover of £434,000; and an average of ten employees during the financial year to which the exemption applies.
Business Minister, Edward 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.”
