It's a Jungle of Regulations on Small Business Out There

The SBA wants to reduce the burden of federal regulations.

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How would you spend $7,647? That's how much the average business in this country with under 20 employees loses a year for each of its employees because of federal regulations. Thomas Sullivan, the chief counsel for advocacy at the Small Business Administration, testified yesterday before the House Committee on Small Business about ways his office is trying to reduce the $1.1 trillion burden that federal regulations place on businesses. Sullivan also noted that this burden falls disproportionately on smaller businesses. In 2004, the cost of regulations for businesses with more than 500 employees was $5,282 per employee.

The gist of what Sullivan said is that the SBA Office of Advocacy is singling out some of the "low-hanging fruit" regulations to be revised, but it's going to be a slow process, as can be expected of any bureaucracy. Last summer, the SBA launched its Small Business Regulatory Review and Reform Initiative, which each year will come up with a "top 10" list of regulations to be addressed. Sullivan's testimony includes the list of this year's top 10, which contains some nuggets like this:

Internal Revenue Service—Simplify the Home Office Business Deduction. The IRS should revise their rules to permit a standard deduction for home-based businesses, which constitute 53% of all small businesses;

That's a huge issue for all of the Internet-based start-ups popping up, many of which are home based. Sullivan says that "some of the [top 10] will not be revised for one or even two years." Let's hope it doesn't take long for this item in particular.

Go here to propose regulations for the next top 10. Of course, this covers only federal regulations. But we know that local regulations can be just as much, if not more, of a hassle.

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