Tag Archives: Small Business

Small Business Regulations

Consider This!

$1.1 Trillion! That is the annual cost to Americans for businesses to comply with mandated government business regulations, according to the Office of Advocacy of the Small Business Administration. This is more cost per household than the cost of health insurance. Think about it.

Moreover, smaller businesses bear the brunt of these government regulations and pay 45% more per employee to comply with mandated regulations, than big businesses do.

Bear in mind that these numbers are before the new regulations coming out of Congress take effect, e.g. new health care insurance. So this cost will only continue to rise.

And we wonder why small business is not hiring people, and pulling us out of the recession like it has in the past.

Of course you do know, that businesses MUST pass ALL of these costs for government regulation on to the consumers of the goods and services they provide, in order to stay in business?

Question: Isn’t this a hidden tax on every consumer, just to pay for bureaucratic bloated programs dictated by the government?

Putting Tax Cuts in Terms Everyone Can Understand

Some time ago I ran across the following post from Mark Gwilliam (see below), and I just had to post it here in its entirety. This might be a little tongue-in-cheek?

“Suppose that every day, ten men go out for beer and the bill for all ten comes to $100.

If they paid their bill the way we pay our taxes, it would go something like this:

The first four men (the poorest) would pay nothing.

The fifth would pay $1.

The sixth would pay $3.

The seventh would pay $7.

The eighth would pay $12.

The ninth would pay $18.

The tenth man (the richest) would pay $59.

So, that’s what they decided to do.

The ten men drank in the bar every day and seemed quite happy with the
arrangement, until one day, the owner threw them a curve. “Since you
are all such good customers,” he said, “I’m going to reduce the cost
of your daily beer by $20.”Drinks for the ten now cost just $80.

The group still wanted to pay their bill the way we pay our taxes so
the first four men were unaffected. They would still drink for free.
But what about the other six men – the paying customers? How could
they divide the $20 windfall so that everyone would get his ‘fair

They realized that $20 divided by six is $3.33. But if they subtracted
that from everybody’s share, then the fifth man and the sixth man
would each end up being paid to drink his beer.

So, the bar owner suggested that it would be fair to reduce each man’s
bill by roughly the same [ratio] amount, and he proceeded to work out the
amounts each should pay.

And so:

The fifth man, like the first four, now paid nothing (100% savings)

The sixth now paid $2 instead of $3 (33%savings).

The seventh now pay $5 instead of $7 (28%savings).

The eighth now paid $9 instead of $12 (25% savings).

The ninth now paid $14 instead of $18 (22% savings).

The tenth now paid $49 instead of $59 (16% savings).

Each of the six was better off than before. And the first four
continued to drink for free. But once outside the restaurant, the men
began to compare their savings.

“I only got a dollar out of the $20,”declared the sixth man. He
pointed to the tenth man,” but he got $10!”

“Yeah, that’s right,” exclaimed the fifth man. “I only saved a dollar, too. It’s unfair that he got ten times more than I!”

“That’s true!!” shouted the seventh man. “Why should he get $10 back
when I got only two? The wealthy get all the breaks!”

“Wait a minute,” yelled the first four men in unison. “We didn’t get
anything at all. The system exploits the poor!”

The nine men surrounded the tenth and beat him up.

The next night the tenth man didn’t show up for drinks, so the nine
sat down and had beers without him. But when it came time to pay the
bill, they discovered something important. They didn’t have enough
money between all of them for even half of the bill!

And that, boys and girls, journalists and college professors, is how
our tax system works. The people who pay the highest taxes get the
most benefit from a tax reduction. Tax them too much, attack them for
being wealthy, and they just may not show up anymore. In fact, they
might start drinking overseas where the atmosphere is somewhat



An excerpt from:  David R. Kamerschen, Ph.D. Professor of Economics University of Georgia”

Mark Gwilliam is the founder and Managing Director of the Business Advisory Services Group a professional services organisation that provides accounting; tax; corporate governance & risk management; business consulting and secretarial services throughout New Zealand and Australia. Mark’s blog is very informative for all small businesses, and can be found here.

Small Business–Hammered Again!

Well, our all-knowing Congress appears to be doing it again—hunting mice with a cannon.

Somehow, I missed all the prior controversy over a new law about to take effect: the Consumer Product Safety Improvement Act (CPSIA). But then, the mainstream media has barely mentioned it.

It seems that this act threatens to drive out of business tens of thousands of small makers of children’s products (not just toys—it appears that zippers and snaps are now considered “lethal”). Moreover, any thrift shop that sells secondhand children’s products (including clothes) will be put at risk for liability.

I am still trying to get up to speed on the elements of this new law, but attorneys are referring to February 10, 2009 as “bankruptcy day”—the day the new law takes effect. Apparently, that is when all manufacturers must “freeze” inventories of children’s products, and components of children’s products, until they can be modified (or destroyed) to comply with CPSIA. Many small businesses in this industry will not be able to afford such a drastic requirement. This could impact as many as 50,000 small businesses…not to mention the impact on retail stores and thrift shops.

It seems like Congress, in its infinite wisdom, will be putting people out of work faster than their stimulus plan can create new jobs. But then, I guess most members of Congress believe it is their duty to protect us from ourselves.

For more information on CPSIA, check out CPSIA Chronicles, February 6.

FLASH: There has been a partial and ineffective reprieve (check out the Chronicles). What’s going on in Washington makes the Keystone Cops look organized.

Federal Regulations Unfair to Small Business.

American businesses pass on to the American people $1.1 trillion in costs of complying with federal regulations. This is more cost per U.S. household than the cost of health insurance.

Smaller businesses bear the heaviest load of the cost of business regulations. They spend four and a half times as much per employee to comply with environmental regulations, and 67 percent more per employee on tax compliance than big businesses do.

This is data recently released by the Office of Advocacy of the Small Business Administration. The Office of Advocacy has been trying for decades to get many of these regulations modified for small businesses—all to no avail to date.

Yet, small businesses—with fewer than 500 employees—are truly the backbone of U.S. Industry. Here are some little known facts about the importance of small businesses in America:

Small Firms:

  • Represent 99.7 percent of all employer firms.
  • Employ half of all private sector employees.
  • Pay nearly 45 percent of total U.S. private payroll.
  • Have generated 60 to 80 percent of net new jobs annually over the past decade.
  • Made up 97 percent of all identified exporters.
  • Hire 40 percent of high tech workers (scientists, engineers, and computer workers).
  • Produce 13 times more patents per employee than large patenting firms, and these patents are twice as likely as large firm patents to be among the one percent most cited.

(The Office of Advocacy of the Small Business Administration also recently published this information.)

So, in spite of all the challenges thrown at small businesses…by government agencies and private institutions alike…small businesses have remained the backbone of America’s Free Enterprise system.

Now, with the economy in the tank, our small businesses are in even greater jeopardy. Let us not allow the politicians to build the barriers any higher.