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Small businesses to be hit hardest by new compulsory pension

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Small businesses seem to be taking a lot of unnecessary hits of late, and they are already feeling the effects of this “injustice.”

It seems the government is not yet content with just hitting businesses with an endless list of legislation and then tying them up with red tape. Now it looks like small business employers will be forced to make contributions to a new National Pensions Savings Scheme or NPSS.

An employee can decide not to participate in the NPSS but with the sheer apathy of most employees it is believed that most will choose to remain in the scheme.

A white paper regarding the issue has already been given to the press and it indicates that employers will be forced to contribute an additional 3 per cent of an employee’s salary into the NPSS. The employee, in turn, will contribute 4 per cent while the government will give one per cent in the form of tax relief.

The white paper also revealed that this new policy will cost UK businesses an additional £2.6 billion every year. It also said that the Government knows that forcing employers to pay into their employees’ pensions will have an especially strong effect on small businesses and that is not yet counting the cost of administering the new pension scheme.

The white paper presented a solution to the dilemma but the solutions – higher prices or lower future wage increases – are considered as highly simplistic and ignores the intricacies of running a business.

52 million pounds funding for business-focused universities

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This piece of news will be welcomed by students all over the country. The DTI has recently awarded �52 million to a number of universities under the third round of the Higher Education Innovation Fund or HEIF. The goal of the awards is to aid in building closer ties between business and institutions that offer higher education.

One of the projects that will share in the 52 million pounds funding handout are initiatives whose goal is to boost the number of entrepreneurs, establish a UK creative industry in China and to target the early signs of disease.

The DTI has awarded to a range of universities under the third round of the Higher Education Innovation Fund (HEIF). The aim of the awards is to help build closer ties between business and higher education institutions.

After announcing the said funding, Secretary of State for Trade and Industry Alistair Darling said, “Innovation and science are the keys to UK economic growth. Figures show that university spinouts floated on the stock market over the last two years were valued at more than �1 billion. Exploiting the wealth of knowledge in higher education and translating that into real business opportunities is, therefore, vitally important for the UK economy.

Darling added that the Higher Education Innovation Fund will bring together university research along with private sector investment and also stimulate an environment of entrepreneurship within higher education institutions. Darling acknowledges that innovation will be an important factor in the country�s economic prosperity and he said that seeing universities working closely with businesses in order to bring new ideas and technology and then transform that into improved productivity and job opportunities.

Blair cabinet re-shuffle hit by interest group

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The recent decision of Prime Minister Tony Blair to reshuffle his cabinet has been hit by an interest group, saying that the move has once again ignored the welfare of small businesses.

The Forum of Private Business (FPB) has maintained that the decision has been detrimental for businessmen and business owners who own small businesses. They particularly cite the reshuffling of the Department of Trade and Industry but overlooking the fact that the position for Small Firms Minister has remained vacant.

FPB Chief Executive Nick Goulding said that he thinks what has happened is another case illustrating the negligence of the interests of small businesses. He maintained that since the post was scrapped by Prime Minister Blair, the needs of small enterprises have gone down the pecking order.

The Small Firms Minister’s duties has been shared out to the Minister of State for Industry and Regions Alan Michaels and Parliamentary Under Secretary Barry Gardener and this is not something that small businesses agree with. In the latest round of ministerial reshuffling the positions have been removed.

According to members of the FPB, small businesses should have ministerial representation at the Cabinet level. Based on a survey conducted on FPB members, 81 per cent of respondents voted in favour of having a Small Firms Minister in the Cabinet.

Goulding shared that “Government is increasingly distant from small firms, whilst large business seems to have direct access to decision makers.”

company formation and business solutions professionals are urging the government to also listen to these interest groups in order to determine if their claims can actually help small businesses in the country.

Make small business tax less taxing says pressure group

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A pressure group is strongly urging the government to finally remove the big headache posed by confusing and time consuming tax returns.

According to the Forum of Private Business (FPB), through its Chief Executive Nick Goulding, “It’s time to make tax returns less taxing. Our research shows that small business is left spending valuable time completing forms that they find confusing and over-complicated.”

Goulding asserts that it is clear that not enough effort is being done in order to give assistance to small businesses in trying to understand what their role and responsibilities are when it comes to filing tax.

Based on the FPB’s league table of taxing forms, the problematic forms were the P35’s, Self Assessment, VAT returns and the expenses and benefits. These are just some of the areas that the group hopes will be simplified in terms of administration.

Goulding issued the sentiments of the group just as the House of Lords Economic Affairs Sub-Committee started examining the effects for tax administration following the Budget.

Goulding further said that “the impact on our members is twofold, they are already over taxed but they also have to deal with the implications should the complicated nature of their tax administration lead to mistakes.”

The group maintains that the government has been slow in acting on the issue and that it is not doing enough to help small businesses fully understand what they need to do when it comes to filing their taxes.

Some company formation and business solutions professionals are also calling for the simplification of the system as it could spur more businesses to file their taxes earlier and also compel those that are intimidated by the process to actually file their taxes.

Offshoring and quality

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It used to be that when an item is “made in Taiwan,” it’s a cheap knock-off that’s bound to break down after a few uses or a short period of time. Now, however, Taiwan is at the forefront of technological innovation, with development of customer-grade and high-end computer systems. For instance, did you know that majority of the laptop computers shipped worldwide were made in Taiwan by little-known—but very large—production companies that manufacture computers to specification by their American or European clients?

This only means one thing: in the business of offshoring, “cheaper” doesn’t always translate to “lower quality.” Companies have made their systems more efficient, capital, technology, and labor-wise that they can afford to do things at a lower price than, say, if these business processes were done in more expensive locations in the world. In this case, when efficiency means either lower cost or higher quality output, it’s likely to be both—high quality at a low cost.