Microbusinesses lack preparation for auto enrolment
The UK’s microbusinesses are blissfully unaware of what impact auto enrolment could have, according to new research.
A lack of preparation was discovered among the smallest UK businesses when accounting software firm Intuit Quickbooks studied the market.
Despite the fact that auto-enrolment costs are predicted to be around £9,000 for every small firm, 40% of microbusinesses did not know, or thought it wouldn’t carry a cost to set up.
A further 11% thought it would cost £5,000 or less, displaying a lack of knowledge among Britain’s smallest and most vulnerable companies.
Auto enrolment also takes an average of 103 days to successfully implement although 85% of the firms polled thought it would take 50 days or less.
Microbusinesses account for 96% of all UK firms and it is feared that employees may pay the price should their employer have to stump up funding to cover the costs of auto enrolment.
A third of business owners in these companies said they planned to offset any financial implication from implementing the new scheme by capping salaries and staff bonuses.
A further 19% said they would cut employee benefits and entertainment while just 37% said they would use working capital from the business to cover the costs.
More than half of those questioned suggested they would consider illegal noncompliance if they were unlikely to be found out by the Pension Regulator.
Two thirds were also prepared to miss the staging date for their company.
Given that microbusinesses are among the most vulnerable in the UK, some could find themselves in financial difficulty should auto enrolment not go to plan.
Putting systems in place to deal with the changes should ensure a smooth transition although those fearing cash flow or other financial problems should contact an insolvency practitioner for advice at the earliest opportunity.
This may offer a suitable solution while it is recommended that microbusiness owners also research auto enrolment to have a clear understanding of what is required in the years ahead.
By Phil Smith