Limited company contractor numbers may be higher than previously thought, according to the results of a new government survey. The latest Department for Business, Innovation & Skills’ Small Business Survey 2012: Businesses With No Employees confirms that there are in excess of 800,000 one-person limited companies in the UK.
Although many of these companies are engaged in non-contracting activities, such as manufacturing and building, this total suggests that the number of limited company contractors is higher than previous estimates.
PCG’s most recent ‘Kingston report’, Exploring the UK Freelance Workforce 2011, suggested that just over 150,000 contractors and freelancers defined themselves as ‘sole director of own limited company’.
The key findings of the BIS research include:
- There are 3.557m businesses in the UK with no employees, out of 4.794m UK businesses in total, accounting for 18% of all private sector employment
- 74% of all businesses with no employees have only a single proprietor, partner or director
- 23% of these are limited companies, totalling approximately 818,169 one-person limited companies
- When asked, the directors of 69% of one-person limited companies said that they had always traded as a company
- Average annual sales turnover of all businesses with no employees was £127,100
- One-person limited companies were most likely to be found in the information/communication and business services sectors
- The economy, competition, regulations, cashflow and taxation were the top five barriers to one-person companies’ business success
- 34% had sought external advice or information, mostly from their accountants.
Many one-person businesses appear to be ‘lifestyle businesses’ with no growth plans, as only 23% had a sales turnover greater than 12 months previously, and only 29% thought this was likely to increase over the next 12 months.
However, the number of businesses forecasting increased sales over the next 12 months rose to 41% in the information/communications sector. In contrast, only 22% of construction businesses expected increased sales over the next 12 months.
The 2012 Small Business Survey, on which this one- person business report is based, draws on interviews with 5,723 owner managers of small to medium sized enterprises (SMEs), of which 955 had no employees. It also showed that family businesses, such as typical ‘husband-and-wife’ contractor limited companies, would appear to be thriving: 79% of companies with multiple owners have more than one person from the same family.