Small businesses are losing around 12 working weeks a year dealing with red tape, according to research conducted by LexisNexis.
Issues such as health and safety and tax legislation are halting productivity within small businesses, taking up a quarter of the entire working year.
With around 3.8 million small businesses in the UK, contributing 37% of the UK domestic turnover, the loss of productivity due to red tape is highly significant.
Michael Thewlis, head of IRS research, said, “An alarming finding of our small business monitor conducted for LexisNexis was the number of people who cited, indeed specifically mentioned, the issue of red tape as a reason why they would not recommend someone to start their own business.”
The main concern among small businesses is the paperwork required to deal with health and safety issues. This concern was cited by three-quarters of entrepreneurs, followed by tax legislation (64%) and the data protection act (44%).
Employment law was another less than favourite subject amongst entrepreneurs, unsurprising given the increasing scale of compensation awarded for unfair dismissal.
At present 22 new regulations designed to govern small businesses are to come into effect during 2004, with many others under review.
Jemma Macfadyen of LexisNexis adds, “Hardworking small businesses can easily fall foul of the law if they do not keep track of their regulatory requirements.
“As employees and customers become increasingly litigious, and the government imposes more and more legislation, individual directors are becoming increasingly likely to face law suits and even prosecution for failing to comply.”