More than 50,000 UK companies, including small businesses, are likely to benefit from new accounting rules.
The Financial Reporting Council (FRC) has published FRS 102, which will see accounting rules cut by as much as 90 per cent.
FRS 102 will come into effect on January 1st, 2015, with many hoping that the reduction in red tape will remove the administrative burden on firms and boost growth.
The rules will replace the current UK Generally Accepted Accounting Principles (GAAP) and are expected to affect tens of thousands of firms.
Iain Selfridge, partner, PwC, welcomed the news and said that the FRC had made the implementation after listening to the positive feedback on draft proposals.
“In particular, we welcome the fact that FRS 102 incorporates many aspects of previous UK GAAP that will minimise the effort involved for many companies moving to the new framework,” he said
Now that there is a clear outline as to what accounting choices are available to UK firms, businesses will be better placed to make the right decision in terms of tax and financial requirements.
However, Mr Selfridge warned that two years is not a long time so businesses should do what they can now to ensure they are prepared to implement their plans in good time.
“Early conversion may also provide the opportunity to simplify group structures and associated costs, or be the trigger for implementing an improved reporting process," he said.
Accounts are something many small businesses find challenging, with many taking a DIY approach despite their lack of knowledge.
However, despite the need to keep costs low, small firms could benefit from hiring an accountant rather than relying on themselves, especially now the burden of such heavy regulations has been lifted.
A skilled accountant doesn’t just keep tax and financial records in order; many have the ability to review business data as it comes in and work with entrepreneurs to develop a plan for future growth.
Accountants may also be able to identify savings that small business owners have missed out themselves.