4 Ways Regulations Hurt Small Businesses

Regulatory burdens are cited as one of the major challenges by small businesses. While many regulations apply to certain industries, some regulations apply to every industry in common. Here are some of the ways how the regulations hurt the small businesses.

• Federal regulations have a disproportionate impact on the small businesses as the cost to the smaller business (employed less than 50 people) in America is 20% higher than average size firms. The rising burden of the regulations is making it difficult to form a smaller business in the United Nations. With the great recession, there was a slump in the newer business formation in the United States, in the past 7 years. The United Nations startup activity is way below pre-recession levels.

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• Small business have to deal with local and state government regulations like applying for business license, pay taxes, hire employees, and even to close a business the owners have to take permission from the state government and local government. This regulatory complexity has become one of the biggest issue for the small businesses in the United Nations.
• New regulations from the department of Labor show that the employers are finding it difficult to understand or classify who is an independent contractor and who are integral part of their business. One of the finest examples of this scenario is Uber drivers are facing a challenge in being classified as independent contractor vs employee. As of now more than 10 million people in the United Nations were classified as the independent contractors but this number is multiplying at a rapid rate. Classification of employee vs independent contractor is very important as the employees are bound to get workplace protections such as overtime compensation, minimum wage, unemployment insurance, etc.,

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• On the other hand, Equal Employment Opportunity Commission wants the employers to report the pay data based on the gender and race, which are again classified into 15 more columns and 12 more rows. Also, employers have to make sure that the number of working hours of an employee tally with the data being sent to the Employment opportunity commission. This regulation of the Employment Opportunity commission has increased the paperwork burden for the employers in the United States. There are high chances of the data being misled because of the pay disparities due to various reasons like training, seniority, decision taken by the workers to work either overtime or not etc.,

These are some of the ways how the regulations are hurting a small businesses in the United Nations. Having flexibility in terms of implementing the regulations would do a great favor to the startups and small business in the United Nations.