Over recent weeks, the leader of the Labour Party, Ed Miliband, has wasted no time in highlighting how the party will take steps to assist and aid small businesses if it comes into power at the next general election in 2015.
However, Prime Minister David Cameron is making sure he doesn’t rest on his laurels, outlining his own plans for aiding small businesses.
One of the key moves planned by the prime minister to help small businesses is to offer a new employment allowance, which can help to reduce their employer national insurance bills. Cameron has described small businesses as the ‘lifeblood’ of the economy, promising to back them in a number of different ways.
Ed Miliband recently talked about his plans to cut business rates for small businesses in a bid to become known as the party with the best interests of Britain’s small businesses at heart. However, Cameron plans to give him a run for his money with his own tax cuts as well as with a planned penalty system to help ensure small businesses are paid on time by larger companies.
According to some recent figures, an astonishing 85 percent of small businesses have experienced problems recently when it comes to getting payments in on time from clients. The CBI said that although late payments were a problem for any company no matter what the size, they were a particular issue for smaller companies that relied on timely payments for cash flow.
Under new regulations, larger businesses could face financial penalties if they delay payments to small businesses. Payment delays can create huge problems for small companies, as it can bring their cash flow grinding to a halt, causing them to default on their own payments and in some cases leading to the closure of the business. This is something that the government clearly wants to avoid, and the Prime Minister believes that ensuring timely payments could go some way towards reducing the risks.
The new tax allowance measure will form part of this year’s budget according to the government, and the figures indicate that 1.25 million companies will benefit from it in total. It will mean that nearly half a million companies will no longer have to pay any national insurance and more than 90 percent of the allowance benefit is set to go to small businesses with employee numbers of fewer than 50.