What will 2014 hold for limited companies and sole traders?

Tuesday 31 December 2013

The new year is here and, according to the Federation of Small Businesses (FSB), it is likely to be a positive one for limited companies and sole traders.

John Allan, national chairman of the organisation, said: "I feel 2014 is going to be the year of small business." This is despite the fact that the economy - while growing - is still fragile.

"FSB research indicates a sea change as firms feel more confident and want to invest and grow their businesses," he said.

The general election in 2015 is also likely to play in the favour of small companies. Mr Allan explained that the main political parties are beginning to set out their priorities for the coming year and, with almost all of the UK's 4.9 million businesses being small ones, winning their votes will be integral for success.

Indeed, the issues that affect limited companies and sole traders, such as access to finance, have been hot topics already, dominating business headlines in 2013.

The government - in whatever form it may take in the future - still has some work to do though and while conditions are likely to improve for small organisations, more support is needed.

One area to be tackled is business rates. "I am personally shocked by the high cost of business rates," Mr Allan said. "In some cases small firms pay more in rates than rent. This cannot be right and the appeals process is often lengthy and unfair."

The government has committed to addressing the appeals backlog, however, demonstrating that the business environment is moving in the right direction.

Small Business Rate Relief has also been extended, but the FSB claims there must be a fundamental review of the system.

Tax and compliance will no doubt continue to be an issue for small companies, especially as HM Revenue and Customs works to crack down on avoidance and switch to a paperless system

Meanwhile, the FSB is calling for the government to look at national insurance contributions as a means to incentivise small firms to take on staff. Employment allowances and the young persons' allowance will also help when hiring begins.

However, hiring will undoubtedly be linked to the skills shortage and the lack of permanent staff with the abilities needed by employers will cause the self-employed to remain in demand.

Yet, the government can't afford to leave the skills issue to deal with itself. Mr Allan explained: "The economy continues to show signs of recovery with further growth expected next year. This must be underpinned by increasing the skills base and getting young people into the jobs market must be a priority."

For sole traders and limited companies working from a self-rented fixed premises, energy is likely to continue to be a contentious issue.

The FSB is looking for radical reforms to improve transparency and allow small firms to switch to more competitive energy deals with ease.

"Unlike households, small firms can't access published prices making it almost impossible to work out their future overheads," Mr Allan stated. "It isn't right that most micro businesses consume the same amount of energy as an average household yet are treated differently. It is only right that they are offered the same level of regulatory protection as domestic consumers."

By Victoria McDonnell

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