More than ever, small business owners are ranking federal regulations as their top business issue. The National Federation of Independent Business found in its May Small Business Economic Trends Report that 20% of small companies are citing government regulations and red tape as the single biggest problem their business is facing—beating out poor sales and taxes.
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The size and scope of regulations are what harm small businesses, according to Dan Bosch, manager of Regulatory Policy for the NFIB. The Small Business Administration’s Office of Advocacy found that the average cost borne by small businesses is $10,585 per employee.
“There are so many regulations to comply with, and the costs are disproportionately higher than they are for large businesses,” Bosch said. “It costs a small business 36% more to comply than a large business.”
Bosch said small companies are too wrapped up in their day-to-day operations, and lack dedicated personnel departments to ensure compliance, leading to higher costs and more time spent dealing with regulatory burdens.
Regulations from the Environmental Protection Administration (EPA) and the National Labor Relations Board (NLRB) are particularly burdensome to small businesses, Bosch said. EPA regulations in particular cost small companies 364% more than large firms to comply with, according to the SBA.
The NFIB says it is not calling for eradicating regulations completely, but rather a more sensible regulatory process.
“We would like to see the slowing of the pace of regulations coming out so small biz can be prepared for the tidal wave coming at them,” Bosch said. “Also [we would like] the administration and Congress to set policies that allow for further analysis of regulations before they are put in place.”
The group is pushing for the Senate to approve H.R. 527, which was passed by the House of Representatives in December. The Regulatory Flexibility Improvements Act would require federal agencies to estimate the direct and indirect economic impact of new regulations on small firms.