Dealing with small business red tape: where to start

Red tape is a notorious pain for many small businesses – here's our guide to getting a head start

For many small businesses, fitting in with the rules and regulations that govern virtually every part of company life can be a real headache. The British Chambers of Commerce, which campaigns against excessive red tape, has estimated that the cost of compliance to UK firms of regulation introduced since 1998 has reached a whopping £77 billion.

But the penalties for non-compliance can be even greater. Depending on which rule you fall foul of, your company can be fined virtually unlimited amounts, and business owners and directors can in some cases be held personally responsible for any breaches. And that doesn't include the damage to the reputation of your business. For example, firms that don't pay attention to their health and safety rules and have someone get injured or even die will struggle to attract customers ever again.

Where to start

Every time a political party looks for an easy win against its rivals, it promises to cut the regulatory burden on businesses. And the current government is carrying out promises to reduce the numbers of regulations SMEs need to work through. But no matter how much red tape is cut, there will always be rules to follow. And the first point is to work out how to know those rules - after all, ignorance is certainly no defence.

Where do they come from?

The UK, of course, does not have a single legal system. So while most rules are the same no matter where your business is based, there will be variations if your firm has a base in Scotland or Northern Ireland.

And while most rules are created by UK bodies, an increasing number come about as a result of European Union legislation. That doesn't mean you then have to go searching through the files at Brussels to make sure you're compliant; these rules are then introduced into UK law. There's no difference in importance between UK and European rules - you're going to need to follow them all.

Where to look

There is plenty of independent information on the internet to guide you to the right rules you need to follow. The government site Businesslink is a great place to get started. It has listings for the most common areas of business law that give you the lowdown on what you need to know.

Rules on finances, including your responsibilities as an employer, can be found on HMRC's site. Not only does it explain the rules you must follow, it also gives you the opportunity to complete many of the financial records you need to submit.

For limited companies, Companies House explains in easy-to-follow language all the requirements you need for your business. And safety in the workplace and during work activities can be found at the Health & Safety Executive.

Independent organisations that offer guidance on red tape include the Federation of Private Businesses, which not only lists many of the major rules, but explains how they can be followed and campaigns for their reform.

If you are an employee and are concerned about any breaches by your employer, DirectGov can give you more information.

Tied up in red tape image - courtesy of Flickr user Info-Mofo
Red tape image courtesy of Flickr user macinate
Dangerous load image courtesy of Flickr user Info-Mofo