Currently, all small and medium sized enterprises (SME) are treated under the same umbrella, in terms of regulations and taxation. But should ‘micro businesses’ that only employ’s one or two people be treated differently?
At present, a company employing fewer than ten people with an annual revenue of less than £1.7 million, is defined as a ‘micro business’. However, according to a small minority of members of Parliament, 95 per cent of all SMEs fall into this category. The MPs in question want the Government to change the meaning of the term ‘micro business’, to be that of a company employing less than five people.
According to a report from the MPs in favour of the change, it stated: “The consequence of this lack of definition has been an inability of government to create policy tailored toward this group,” according to the report. Such a group is too large in number and share of the economy and too diverse in nature for cohesive policy making.”
MPs are in favour of changing the term as they believe that micro businesses will kick start the economy in terms of employment. Many start-ups businesses begin as a home business as a sole trader, but if the business is a success they will soon need to employ more people and may even move into a commercial property. All these factors will help the economy, by helping to reduce the high unemployment figure that the UK faces today, and also by decreasing the number of vacant commercial properties.
A sole trader, Hayley Chalmers who is in favour of the change, expressed: “We’re not ignored by Government, we are invisible to Government. The world is very, very different for a sole trader, or a company of three or four employees. We don’t have the resources to deal with EU or UK government legislation, [and] they cannot address us separately.”
However, for now, the definition of a ‘micro business’ will remain the same, as the proposition was rejected by the Government, as Mark Prisk, Business and Enterprise Minister, put across: “I believe excluding businesses employing between five and nine employees from this definition may have a detrimental effect on a significant number of businesses, as they could miss out on several current exemptions based on size of business, such as the three-year moratorium on new domestic regulation for micro businesses and start-ups.”