A question often asked is how many businesses are there in a certain town or county. The answer of course is that we have no way of knowing. In the UK there is no formal registration process for a public database that businesses have to comply with.
However, once a business starts trading it should tell HMRC. So it follows that HMRC records are the only potential source of comprehensive business numbers information.
Every year the Department for Business Energy and Industrial Strategy (BEIS) works with HMRC to produce the UK Business Population Estimates as at the start of the year. These numbers are usually published on gov.uk in October but this year publication was a few weeks late. The data is published at UK level but does also provide some analysis, such as employee numbers, at regional level e.g. East Midlands.
The estimates are refined to a certain extent by information from databases where businesses do have to register such as VAT or PAYE where relevant and of course Companies House where the business is a Company.
This element of the whole business population is known as ‘Registered Businesses’ and estimates for these are eventually available at a more local level via the Office for National Statistics (ONS). FSB has started to campaign for more data relating to Unregistered Businesses to be available locally, ideally at Local Enterprise Partnership level. Registered Businesses still account for 45% of the UK total.
Of course, a single annual publication does not provide much of a story but looking at year on year trends does allow more valid analysis. The 2017 estimates do not include any major surprises with the total population up by 197,000 to about 5.7 million with SME’s accounting for all but 0.1% of that as before. Interesting trends, although not a focus for BEIS, though are the percentage of the total that are Companies and the percentage that are Sole Traders with employees.
Looking first at Companies, the percentage has been increasing gradually up to the current 33% but over a time when the reasons to incorporate have been less powerful. The main reasons for incorporating tend to be taxation and separation from litigation but these do not explain the constant percentage increases. So the rationale for the fact that one in every three businesses is a Company remains unclear.
With regard to Sole Traders, the vast majority, about 92%, still prefer to operate in total isolation without becoming Partnerships or even taking on employees. So for any of them that go beyond that and start employing others it does evidence a real and welcome aspiration for growth. It is a major step to break that ‘glass ceiling’ and become an employer due to the extra administration and regulation involved. From 2015 to 2016 there was a fall from 274,000 down to 265,000 and that has fallen again for 2017 so that 258,000 Sole Traders have employees. For copies of the Business Population Estimates data just visit Gov.uk or contact firstname.lastname@example.org
Many business owners and managers at the smaller end of the scale sometimes believe that they are in the minority. Not so, as 96% of the total have less than 10 employees!