"OUCH REPORT on SMALL BUSINESS
"OUCH REPORT on SMALL BUSINESS"
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 regulatory
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 Councel 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.
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 regulatory
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 Councel 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.
