40,000 New State Laws!

An estimated 40,000 new laws have already taken or will take effect in 2012. Many rules apply exclusively to consumers, but many other new rules affect businesses. Businesses will have to familiarize themselves with the new laws and comply so that they avoid penalties and other problems. Some rules may exempt small businesses; often the definition of what constitutes a small business varies, so it’s not easy to determine whether your company is exempt.

Learning about new laws

It’s a challenge for small businesses to keep up with changes in government rules—be they statutory (new laws) or regulatory (issued by government agencies such as the IRS and EPA). I monitor numerous government sites daily and I’m certain many changes slip by me.

While you’re busy running a business, how can you also stay up on new rules you need to know about? Here are two ways:

  1. Be a reader. Find the sites, blogs, and other resources that can help you stay abreast of new rules from the government. Industry associations and trade groups can help. My Idea of the Day® and Big Ideas for Small Business® present many of the changes you need to know about. Following these resources won’t cost you any money, but there is a time commitment you’ll need to handle.
  2. Work with a proactive attorney. Many law firms send their newsletters to alert clients to relevant changes. Working with an attorney may cost you billable hours, but save you penalties and hassles with the government.

Cost of compliance
In 2010, the SBA’s Office of Advocacy released a report showing the cost of compliance on small businesses. At that time, the cost of compliance was $1.75 trillion annually. The largest burden falls on small firms (those with fewer than 20 employees), which represent 89% of all small businesses in the U.S. On average small firms pay 36% more than large firms (those with 500 or more employees), but the cost for EPA compliance is four times as much for small firms as large one.

In round numbers, regulatory compliance costs small businesses more than $10,000 for each worker each year. How can this continue? The cost is still rising (remember the cost does not even reflect the increased burdens of Obamacare which are yet to take effect).

Any hope for change in 2012?
Last year the President issued an executive order to improve regulation and regulatory review. The intention is good; the results so far have been questionable.

Small businesses have yet to see any significant results from government on this issue. What’s needed is not just an executive order; we need more common sense from government officials. A small business should not be shut down (because of onerous fines) for a minor, unintentional, infraction. Regulations certainly have their place to protect the public, but overregulation doesn’t help anyone but the bureaucrats who are authorized to enforce them.


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