The true number of startups in the UK could could be less than half the official figure started in government reports.
A freedom of information request, sent by Crunch Accounting to HMRC, revealed that just 200,000 company payroll schemes were set up last year. This is in comparison to the government’s figures which say 451,700 new companies were set up.
The government’s figures are based on the number of limited companies formed, but Laura Hughes, accountancy training manager at Crunch Accounting, says it may be more accurate to measure the true number of new businesses by the number of new payroll schemes established.
A new limited company does not necessarily mean a new business, as many ‘shelf companies’ are formed and made dormant to be sold at a later date, or new limited companies are created as subsidiaries of existing companies.
Hughes says, “A new PAYE scheme is a much better indicator that a business is actually trading than a limited company on its own. If the same ratio of incorporated companies are not trading in 2013/14, the actual number of startups in the UK this year stands at around 132,000, rather than the 300,000 publicly reported by Companies House.”