Ouch Report for Small Businesses

Sept. 21, 2010 - PRLog -- Boston, We are all aware of the enormous compliance costs put on small business by the Federal Regulatory Agencies. Here are a few excerpts from a recent report developed under a contract with the Small Business Administration Office of Advocacy named The Impact of   Regulatory Costs on Small Firms. Tom Giampapa from Bizlinkin.com calls this the "SMALL  BUSINESS OUCH REPORT"

   The annual cost of federal regulations in the United States increased to more than $1.75 trillion in 2008. Had every U.S. household paid an equal share of the federal regulator burden, each would have owed $15,586 in 2008. By comparison, the federal regulatory burden exceeds by 50 percent private spending on health care, which equaled $10,500 per household in 2008. While all citizens and businesses pay some portion of these costs, the distribution of the burden of regulations is quite uneven. The portion of regulatory costs that falls initially on businesses was $8,086 per employee in 2008. Small businesses, defined as firms employing fewer than 20 employees, bear the largest burden of federal regulations. As of 2008, small businesses face an annual regulatory cost of $10,585 per employee, which is 36 percent higher than the regulatory cost facing large firms(defined as firms with 500 or more employees.

   The regulatory landscape in this report emerges from an updated analysis of the regulatory record explored in three previous studies for the Office of the Chief Counsel of Advocacy of the U.S. Small Business Administration(Hopkins, 1995; Crain and Hopkins, 2001 and Crain, 2005. Direct comparisons to the results in these prior studies should be made with caution, however. The present study introduces some new methodology techniques, which may account for some of the differences in the cost estimates for 2008 versus those for prior years.

   Tom Giampapa of Bizlinkin.com lists the Annual Cost of Federal Regulations by Firm Size including: All Federal Regulation, Economic, Tax Compliance, Occupational Safety and Health and Homeland Security.
Cost per Employee for All Firms $16,172. Cost per Employee for Firms with Fewer than
20 Employees $21,171. Cost per employee for Firms with 20-499 Employees $14,908. Cost per Employee for Firms with 500 or More Employees $15,510.

   Environmental regulations appear to be the main cost drivers in determining the severity of the disproportionate impact on small firms. Compliance with environmental regulations costs 364 percent more in small firms than in large firms. The cost of tax compliance is 206 percent higher in small firms than the cost in large firms. Mr. Giampapa of Bizlinkin.com,notes the report reveals that the disproportionate cost burden on small firms is particularly stark for the manufacturing sector as well as large and small within that sector.

   All the information in the report has been reviewed and edited by officials of the Office of Advocacy, However the final conclusions of the report do not necessarily reflect the views of the Office of Advocacy.

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