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One Giant Leap

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Across Britain, millions of small business owners are taking stock of their accounts and getting in shape for what they hope will be a more positive year for business.

At the dawn of a new tax year, Britain's economy continues to face a number of challenges, not least unemployment and the need to create new jobs.

Currently 8.4 per cent of the UK population is unemployed, with an alarming one million young people out of work. As the government has acknowledged and is working to address, if this problem is not tackled head-on, we're in real danger of creating a lost generation.

Britain's small businesses have been hailed as the engine drivers of growth and have been called on by the government to create jobs to address the unemployment dilemma.

However, the reality is that for many small firms, taking on just one employee can appear to be a giant leap of faith. The recruitment process can seem like an unwelcome headache for small companies, which, along with red tape and the legal and tax obligations, all add to the perceived barriers to hiring new staff. This 'fear factor', along with the very personal challenge of bringing someone into what is often a one-person business run by the founder, all contribute to 'employer inertia'.

And yet, these small businesses could be a key factor in tackling our employment crisis. If a quarter of the UK's 4.1 million sole traders and small businesses took on one additional member of staff, we could, in theory, eradicate youth unemployment in this country. And at a time of stagnant growth and rising joblessness, this is certainly a tantalising prospect.

At this very moment, there are thousands of ambitious young graduates and skilled tradespeople in Britain that are ready for work, but their unemployment equals lost potential. So, it has never been more crucial for us to bust the myths associated with hiring staff and ensure it is as simple as possible for the potential powerhouse of small business owners to do so.

Intuit recently polled 500 sole traders and small businesses around the country and found that 91 per cent of sole traders would not consider hiring an employee in the next 12 months. Meanwhile, more than a quarter of respondents cited the administrative burden of bureaucracy and paperwork as the main reason for their reluctance to hire. These are problems for which we can - and must - find solutions.

The research, which was conducted for the new report One Giant Leap: The Vital First Step to Becoming an Employer, also found that small businesses with existing staff members were unwilling to employ, with more than half admitting they're not currently recruiting.

What was striking, though, was that over half of those businesses we spoke to still saw taking on staff as a route to expansion. So, how can we encourage more small companies to take the leap?

Help simplifying administrative tasks, such as creating employment documents, health and safety compliance and setting up payroll, rated highly in those polled. Nearly one of four respondents said that preparing and processing payroll information takes more than two hours each month - hardly surprising when you consider that, despite the advice of HMRC to use an electronic payroll system, many still use basic spreadsheets or pen-and-paper to run their staff payroll.

Sole traders can benefit from learning and gain reassurance from other entrepreneurs that the journey from one-man band to employer is a leap worth taking. They can also benefit by getting a better handle on their finances so they can feel confident in their readiness to hire. Equally, they can educate themselves and make use of the tools available aimed at simplifying these administrative tasks, many of which are built specifically for small businesses.

In his Budget last month, Chancellor George Osborne accepted a number of the recommendations from the Office of Tax Simplification aimed at reducing the burden of compliance for small businesses, including plans to calculate tax on a cash basis for micro-businesses. And companies of all sizes will welcome efforts to merge income tax and National Insurance contributions calculations.

Steps are being made by the Government to address these problems. But the message coming loud and clear from the small business owners we spoke to is that more can be done, and that we all need to step up to help.

As a nation, we desperately need small businesses, the drivers of our economy, to create new jobs as they grow. There is no shortage of talent and ambition and if we can harness that potential across Britain's 4.1 million small firms, then we'll be one step closer to economic recovery.

Pernille Bruun-Jensen is vice president and UK managing director of Intuit, the QuickBooks small business accounting and payroll firm. www.intuit.co.uk

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