George Osborne, walking through the financial district of Canary Wharf, London. Photo credit: The Conservative Party
Recently, there has been no shortage of political rhetoric about small business representing the engine that will restart the British economy; the business sector that must most be encouraged. Towing that line, the British Chancellor of the Exchequer, George Osborne, at this week’s Conservative Party conference proudly announced the government’s intention to throw a credit line to small and medium businesses.
Now, as a small business owner myself – I founded Periscope in early 2010 – I must admit I’ve paid more than a little attention to all this cozy talk from the government. And frankly, I’ve heard enough. It’s high time the Coalition backed up all the encouraging talk with real action to help plucky start-ups mature into fully-fledged firms. It’s all very well for government to say they want to help us and that we’re the growth engine of the economy, but it’s better when they offer real incentives, rather than simply inviting us to get further into debt.
As the chancellor no doubt is an avid reader of The Periscope Post, I thought I’d put together a few suggestions of things he could do that might actually help small business owners.
Zero tax rate until breakeven. Without a doubt, the most infuriating aspect of starting a business has been paying taxes when there is not yet any profit to be taxed. If the government waived the obligation for employers to withhold pay as you earn taxes (PAYE) and National Insurance contributions (NIC) for start-ups yet to reach break-even, employers could offer higher real earnings salaries. This in turn would attract more high quality employees or permit existing high quality employees working part-time to work closer to full time. A business can only be as successful as the people working there.
If waiving taxes entirely is unpalatable, the government could at least waive PAYE and NIC for part-time employees and reduce the minimum threshold for the withholding requirement.
Subsidized office space. The government could further foster small business growth by helping start-ups find space to work. Face-to-face interaction among work colleagues cultivates ideas and inspires a shared enthusiasm for succeeding in a common goal, but London real estate is expensive.
The current government could hardly hide its despair when their efforts to lure Twitter to their beloved “silicone roundabout” area of London were rebuffed in favour of tax friendlier Ireland. Well, that must mean there’s loads of space for us little guys to stretch out, and I’ll wager most of us wouldn’t even mind sharing offices with other start-ups. After all, to paraphrase a Coalition pronouncement, we are all in this together.
Offer start-ups assistance with Intellectual Property filings. Many new businesses discover better ways of doing things as they go along, or are premised entirely on inventing a new product or technology. Yet filing for copyright, trademark, or patent protection can be complicated and costly.
Offering start-up companies with limited resources a streamlined application processes would be a good start. Supporting those applicants with a network of lawyers willing to put in a few hours of pro bono work, or even retired lawyers keen to keep busy with some part-time work would be even better.
If you make it easy to make money, we’ll make money.
In short, let us run our businesses how we want to – if we need a loan we’ll apply to a bank – and you, government, focus on ensuring that our cost of doing business is as close to zero as possible. As soon as we start breaking-even all breaks and subsidies are off the table. If you make it easy to make money, we’ll make money. And I bet that those of us who succeed in becoming the next Twitter or Apple will remember the help we got when we started and will be more likely to stay in UK plc rather than upping sticks to Ireland or the US.
