The accounts of small businesses should become easier to compile following a new consultation process by the Financial Reporting Council (FRC), according to DSH Chartered Accountants & Business Advisors.
On September 1 the FRC issued its ‘Accounting standards for small entities – Implementation of the EU Accounting Directive’ consultation document, following changes in EU Law.
The new EU Accounting Directive was approved in June 2013. It introduces a number of accounting changes for small businesses including a restriction on the disclosures that member states can require small companies to give in their accounts, as well as defining new financial thresholds for what constitute small, medium and large businesses.
“The Government has until July 2015 to adopt the new EU directive into Company Law, and it must be in force for accounting periods starting on or after January 1, 2016,” said Stephen Farrant, Partner at DSH.
The FRC proposals define micro-businesses as those typically turning over less than £632,000 a year with 10 or fewer employees, and small businesses as those with a turnover of less than £10.2 million with no more than 50 employees.
Stephen added: “The proposed new financial reporting standard for micro-businesses will make their accounts simpler.
“The standard for small businesses will become consistent for those used by other unlisted companies, company subsidiaries and charities, but the presentation and disclosure requirements will be more straightforward.
“On the face of it, this is good news for small and micro businesses and their accountants.”
The FRC consultation on the new standards runs until November 30.
For more information, or to find out how the changes could affect you, contact DSH Chartered Accountants & Business Advisors, on 01622 690666 or visit www.dsh.co.uk.