Government must have legal framework in place for small businesses to flourish
Date
11 Jul 2019
Sections
Euro & Finance
InfoSociety
The professional body for accountants ACCA (the Association of Chartered Certified Accountants) is asking whether businesses and policymakers are compromising the performance of small business in a new report issued today, Building the legal framework to help business succeed.
Whether through over-familiarity or lack of awareness, there’s a risk a key ingredient in the formula for success is being overlooked – the legal form through which businesses operate.
The report calls on government to put legal structures in place, so that all businesses can thrive and benefit from the support mechanisms available. It explores the following four key elements entrepreneurs and policymakers must consider:
- Realising the returns: Success can mean different things to different businesses. The founder’s goals can range from financial security to ‘giving something back’, and increasingly entrepreneurs are looking to be measured on social and environmental goals alongside the monetary returns.
- Investing into the business: regardless of the owners’ final aims, every business needs investment, and most will need more than the founders have saved. How that money is raised, and who from, will have wider implications for the rest of society. As technology changes the ways that can happen, regulators must adapt to new structures.
- Legal characteristics and regulation: The defining legal characteristic of a business form will be whether the business has a separate legal identity from its owner. Who makes the business decisions, who will be liable if things go wrong, and for how much, are vital considerations for those in the business and anyone who might buy from, sell to or be employed by it. The frameworks need to be effective, efficient and trusted.
- Administrative requirements: Aspiring entrepreneurs are often most concerned about the ease of starting up and the burdens of registration and the like. Advisers and existing business owners tend to be more concerned about the long term running costs of annual filings and reporting requirements. Policymakers though must address both, striking a balance between rigour and efficiency.
Jason Piper, ACCA’s head of business law, says:
‘Small businesses are the lifeblood of society, creating and sharing wealth at a local level. It is vital the health and sustainability of all that the right legal frameworks exist to enable every business to flourish. Building trust and managing risk are key elements in enforcing a secure environment for entrepreneurs, investors and customers alike.
‘Lawmakers must ensure the legal forms available reflect the needs of a modern economy. The roots of existing forms can be traced back hundreds of years, and while the concepts of trust and economic growth haven’t changed, the way we do it has changed beyond all recognition, and the pace of that change is accelerating. Having the right businesses operating helps governments in two ways: by deepening the pool of talent for procurement purposes and by providing social support and social benefits that the state might otherwise have to fund directly.
‘It is vital that government can encourage, protect and regulate effectively the talents as well as resources needed by businesses.’
The report can be found on ACCA’s website: https://www.accaglobal.com/gb/en/professional-insights/global-profession/Business-Forms-Building-the-legal-framework.html
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About ACCA
ACCA (the Association of Chartered Certified Accountants) is the global body for professional accountants, offering business-relevant, first-choice qualifications to people of application, ability and ambition around the world who seek a rewarding career in accountancy, finance and management.
ACCA supports its 219,000 members and 527,000 students (including affiliates) in 179 countries, helping them to develop successful careers in accounting and business, with the skills required by employers. ACCA works through a network of 110 offices and centres and 7,571 Approved Employers worldwide, and 328 approved learning providers who provide high standards of learning and development.
Through its public interest remit, ACCA promotes appropriate regulation of accounting and conducts relevant research to ensure accountancy continues to grow in reputation and influence.
ACCA has introduced major innovations to its flagship qualification to ensure its members and future members continue to be the most valued, up to date and sought-after accountancy professionals globally.
Founded in 1904, ACCA has consistently held unique core values: opportunity, diversity, innovation, integrity and accountability. More information is here: www.accaglobal.com