smallbusiness.co.uk: Helping your business think big

Too much government red tape can make the early stages of setting up a new business particularly difficult in the UK, a leading expert warns.

Harry Katz, principal at Norwest Consultants - an independent financial advisory that specialises in tax - says that setting up the new firm itself can be a relatively simple process compared to some other European countries.

Problems can arise, however, when these new firms begin to look at hiring staff to help their business grow, as UK employment legislation on issues like maternity and other social benefits can be a major headache for smaller firms.

'The problem that we have in England is not setting it up, it's once you've got it running. You're absolutely swamped in red tape,' says Mr Katz.

'There are lots of regulations that exist in this country that make [setting up your own business] less attractive to most. One of the main problems for any business is staff.

'The regulations and all the red tape make it an absolute nightmare and if you're not careful, you could be lumbered with staff that are a drain on your business and could drag you down.'

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