Companies may be encouraged to seek business advice as new, simpler accounting rules come into force to improve their operations.

It is estimated that 1.5 million small British firms will benefit from the plans, which could save them considerable amounts of money in reduced administrative costs.

“This is a significant step in reducing red tape and a clear signal that we will take action to stop our smallest companies being held back by excessive regulation,” commented business minister Edward Davey.

He emphasised that there is the potential for further changes to be made within the European Union to help lower the impact of legislation on small businesses.

Recent research from NatWest and revealed that 61 per cent of start-up businesses find cashflow to be a major problem during the first 12 months of operation.

Furthermore, 40 per cent admitted to over-estimating the amount of sales they would achieve.

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