Given the current climate, it is understandable that businesses, particularly larger organisations, want to stay agile while they grow and expand. The use of short-term contracts and temporary staff are therefore an obvious choice – whether you want to call them freelancers, consultants or contractors – but the path to this type of employment is paved with red tape and confusing jargon.
Of course, deciding to break away from traditional permanent employment, is a significant step, but one that more people are making, especially when faced with long-term unemployment, low wages, and increasing costs of living. Both young graduates, and older people nearing retirement are equally as likely to need to start managing their own income – the aspirant market is certainly significant, but so too are the barriers. The fear factor for setting up your business is high.
Currently the framework for self-employment is heavily tied to HMRC and the choices for trading practices are baffling. Whichever practice you choose – sole trader, limited company, partnership, or franchise – there is a plethora of conditions attached, whether it is about where you work, how many clients you can have, how you employ other staff, and what taxes you need to pay. The feeling that HMRC is ‘out to get you’ is not uncommon.
The reality is that there are very few people in Whitehall who have any real experience of enterprise, and that is evident in the amount of bureaucracy, lack of support and complicated language. However, there are a few things that the government could do to help foster a better enterprise culture.
One of the challenges is a lack of a central resource, or adequate sign-posting on how to set up a business, led by real enterprise experts. This resource could highlight, for example, what grant funding and financial support is available, what business owners can expect from their accountants, how they choose which trading practice is best, how to grow their business, what membership bodies they should join, and what training and continuing professional development resources are available.
Business banking is unnecessarily restrictive and expensive. Very few decent business bank accounts are free these days, and if they are, there is always a catch. Given that taxpayers are part-owners of a major bank, there should be a review of what they offer for small businesses, and develop a better value solution for business customers.
Finally, more tax breaks could prove to be a great incentive for new businesses. For example, offering tax breaks for those contributing to their own pensions, for joining recognised business organisations such as the Chamber of Commerce or the Confederation of British Industry, and for skills development training, could make a big difference to start-ups.
The focus for enterprise should ultimately be growth; thriving, expanding businesses benefit everyone, including the government’s coffers. It is not the place of ministers to define – or rather restrict – our enterprising nation. Small businesses are the foundation of the UK economy, and it is time to loosen the stranglehold of bureaucracy, and actively support their growth.
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Neeta Patel is chief executive of the New Entrepreneurs Foundation. She tweets @NeetaPatel
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