Are Small Businesses Over Regulated?

The classic debate will probably never end. Some politicians believe that the government has its hand in too much. Other politicians believe that the government is the sole resource for those people who have a difficult time helping themselves. One politician who believes that the government is too big is afraid that America’s small businesses are being over regulated.

Erik Paulson, U.S. Representative for Minnesota’s 3rd congressional district, believes that the Federal government is over regulating small businesses and this over regulation could potentially keep small businesses, those who do the most hiring of employees, from recovering from the recent recession as well as continue growing.

One of our country’s core values, according to Paulson, is the idea that Americans can create a business and run it, grow it, and maintain it in anyway they would like. (Within reason, of course) In the first half of 2011, the Federal government issued 38,960 pages of regulation costing taxpayers more than $65 billion. Even worse, during one week in July government agencies proposed 75 new policies and implemented 98. Not all of these were directly related to small businesses but this rate or regulation, according to Paulson, presents big problems for small businesses.

First, the nation’s small businesses are not largely made up of people who can easily comprehend government policy. A plumber who starts her own business doesn’t necessarily have the capacity to understand the multi page policies that come from government entities like the IRS. When a business owner has to comply with a new law or policy, it costs a business owner to things that are often in short supply: Time and money.

Take a recent law that almost went in to effect. A new regulation requiring every business to issue 1099 forms for every vendor who was paid by them was part of the health care legislation dubbed Obamacare. This was supposed to produce revenue by requiring vendors to report all income instead of only income over $600 from any one business.

Although this was supposed to produce more tax revenue, for small businesses, this would have been a much larger amount of work and expense at tax time. For every transaction with a business, which could be hundreds or even thousands in a year, a small business owner would have to collect tax information for each of those businesses and when taxes are completed, a 1099 form would have to be generated and mailed to each of those vendors. To add to the load, that same small business, who presumably was a vendor to other businesses, would have to handle the 1099 requirement as a vendor. Seeing that small businesses could be crippled, Congress voted to repeal this law.

This is only one example of what has Paulson worried. Small businesses need to be left to run their business by providing quality goods and services to their community allowing that business to grow. If, according to Paulson, the Federal government wants small business to thrive, they must get out of the way.