In a recent blog on LinkedIn a contact said of the growth in start ups, "More people are becoming self-employed and SMEs are being lauded as being the ones to drag UK PLC back into prosperity. Or is it a cynical ploy to reduce unemployment figures by having us creating our own temporary jobs?"

What are your thoughts? It's true that the government is putting a great deal of emphasis on the private sector to help the struggling economy and that more and more people are becoming self-employed. However, what are the reasons behind this increase in self-employment? Is it more opportunities to get into business, the lack of jobs, the public sector cutbacks, working to later ages, increase in university fees putting off potential students, greater encouragement of the entrepreneurial spirit?

Another important question is how successful these new entrepreneurs actually are, as if their new venture fail the unemployment figures, and the economy as a whole, definitely won't show any signs of improvement. So, how much support do new start ups actually get? How easy is it to access finance?

As we begin 2012, the economic outlook is somewhat mixed depending on which think tank, economist or business owner you talk to. If you are Robert Peston, however, the world is a very gloomy place and we are all doomed!

We can’t get away from the fact there is a level of uncertainty with the economy – just look at the eurozone. That saga will play into the hands of the Euro sceptics who are gleefully saying "I told you so", but as just over 50% of UK trade is with the EU, the future of the Euro and the EU as a whole will have a direct impact on business here at home.

Looking at the current worldwide economy and the various impacts it can have on the UK is another breakfast meeting all together. So let’s look at the situation we find ourselves in at the moment.

Outsourcing is worth billions of pounds every year and yet there are still businesses that shy away from it due to misconceptions, which we will aim to clear up here:

Outsourcing can be too constricting

In the past it is true that some companies found themselves tied up in long-term deals with outsourcing companies that ultimately proved uneconomical and unflexible for the business. However, this is a thing of the past, and today we see shorter contracts and flexible terms dictated by the customer that result in more productive, successful relationships. Early ‘get-out clauses’ are also common.

One of the most popular posts on StartUp Revolution's forum at the moment is all about outsourcing, and so it seems like the perfect time to revisit some of the key points about outsourcing. Paper Mountain Solutions has successfully been providing outsourcing support for many years, and you can find out more about our services here.

So why outsource? Well, in the words of Paul Smalley, Paper Mountain Solution's MD, "It gives you access to a team of specialists that ordinarily a small business could not afford."

So not only do you get an expert, from finance and admin to graphic designers and content writers, looking after your business, but the outsourcing company will also be employing that member of staff, meaning you don't have to. In effect your business gains expert knowledge and saves money at the same time. An essential combination for any small business.

It's an all too familiar story - business owners taking on too many roles in their company and, inevitably, not able to give their full focus to the business. A survey by Bibby Financial Services found that, for example, 65% help with the cleaning and a slightly lower number do the stationary order. Other common tasks include chasing payment, dealing with suppliers and securing finance. This is all well and good, but when it's being done in addition to their role it can become a burden and detrimental to the business.

Edward Rimmer, UK chief executive for Bibby Financial Services says, "People go into business because they have a passion for something and a good idea, but it is easy to underestimate how many different roles need to be taken on."

While many sole traders may think they are saving money by carrying out their own bookkeeping, research carried out by Unbiased.co.uk has shown over half might actually be missing out on tax savings because they are not using professional accountants for their bookkeeping. Of those surveyed, just over half admitted to doing their own accounts and a fifth of micro-businesses (which consist of 1-9 employees) were also taking a DIY approach to bookkeeping. Clearly it is a risky route to take, especially with the HMRC crackdown on poor small business accounting, which could land business owners with a hefty fine.

Small businesses are being targeted again with the news that HMRC is contacting over 40,000 sole traders and one man companies who they believe should be paying VAT, which is presently set at a threshold of £73,000.

Businesses need to ensure they are fully aware of the financial situation of their company or risk facing fines up to 100%. At present businesses that aren’t VAT registered, but should be, are being offered a partial amnesty with reduced penalties on the outstanding VAT until 30^th September, 2011. However, the HMRC has reserved the right to hand out fines up to 100% where it believes a business knew it should have been registered but didn’t come forward. How the HMRC will decide whether they believe a business knew they should have been VAT registered is not clear.

The extensive benefits of outsourcing, as shown by Paper Mountain Solutions, include access to expert knowledge that your own business does not have, plus the undeniable cost savings that can be made by choosing to outsource particular aspects of your business. To get the best out of your outsourcing partnership, though, you need to think of your outsourcing provider as simply an extension of your existing business. There are simple steps to take in order to create a mutually beneficial relationship with your outsourcing business.

1. Unsurprisingly communication is key, something Paper Mountain Solutions believes strongly in. It's imperative that your outsourcing provider fully understands your business plan and is kept fully up-to-date with changes and developments within your business. The flow of information, both ways, will ensure both sides are achieving the best possible results.

The articles in FT and the Telegraph relate to tax recording and bookkeeping by small and medium sized enterprises (SMEs). HMRC plans to raise an extra £600m over four years by starting trials and paying visits to SMEs to ensure their record-keeping meets the requirements of tax regulations.

According to HMRC’s estimates, 4 in 10 (nearly 2 million) SMEs have inadequate tax records. The programme is implemented to ensure that the current criteria used by tax inspectors successfully identify errors and highlight areas where tax in underpaid.

The first “test and learn” phase will target approximately 1,200 SMEs within the next three months. Tax inspectors will not use their penalty powers unless they discover blatant breaches of tax regulations.

The article posted on the FT’s website describes the ways in which businesses can increase their profitability and customer base by either spending no money at all or by investing in new software or in consultancy services. The article focuses on how important it is that those in charge of the business realise how vital, and very often how simple, it is to make your business more profitable, without spending overwhelming amounts of money on for example hiring new members of staff.

The ways proposed by the article, which many tend to overlook or forget about, include ensuring that existing customers return to buy more by developing long lasting customer relationships, rather than adopting a trade as you go approach. This can be achieved by outsourcing to specialist companies those areas of business that you feel you can squeeze more out of, using their expertise.

Your article this morning in connection with the closure of support networks for business does highlight some potential shortcomings when it comes to Government policy on nurturing start-ups and growth businesses.

The demise of Business Link as you point out will not be missed by many, but on the whole, our experience of the organisation was positive. Nonetheless, reform was due, but will a group of volunteer mentors be able to provide the support required. After all, this is a commercial world, and therefore mentors will look to be recompensed as individuals take advantage of their knowledge. As your contributor Nick Wall comments, he estimates his advice would have cost him £100,000.

Whilst we are seeing the closure of support networks, I note that Nick Ogden is starting up business.co.uk. Although I have yet to investigate the portal in any detail, it can potentially provide an avenue for companies to seek advice.