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Updated: March 27th, 2020
Standing in line for a permit. Poring over tax forms. Scrutinizing the latest health care requirements. Like it or not, dealing with government regulations is a fact of life when you’re running a small business.
From the IRS to the EPA and the FTC, the number of government agencies who set guidelines on the way you run your business can feel dizzying — and that’s just at the federal level. Each state, county, and city also can have its own set of regulations that small businesses must follow.
While each rule was created with good intentions (who doesn’t support clean water and fair business practices!), the cost and complexity of navigating local, state and federal rules can make it cumbersome and expensive for small businesses to comply.
Recently, national and local leaders have increasingly turned their attention toward regulatory relief for small businesses. With this in mind, Funding Circle surveyed ~1,000 small business owners* to get their points of view on how regulatory compliance affects their bottom line.
In the survey, 68 percent of respondents said they felt regulatory compliance put a financial burden on their business. Regulations related to taxation and finances, health care and health insurance, and employee compensation ranked as the most onerous.
Here are three things you can do to relieve this burden and master the art and science of regulatory compliance:
More than a quarter (28%) of small businesses owners said it was “difficult” or “very difficult” to stay informed about new regulatory compliance requirements affecting their businesses. This can be a real challenge because as the saying goes, ignorance of the law is no excuse. You might be on the hook for a violation you didn’t even know you were making.
The news media is a great place to start, especially for more significant policy discussions such as a change in the minimum wage or a major health care policy update. National small business advocacy organizations, like the National Small Business Association and Small Business Majority, provide a wealth of information for business owners on public policy and key issues on Capitol Hill.
Your industry’s leading professional association, such as the National Restaurant Association, can also be a good resource. Nearly half (49.8%) of all small business owners depend on such groups for regulatory updates. And don’t forget your peers — a quarter of all small businesses say they stay informed on regulation through their neighbors on Main Street.
Any business that has suffered a government fine (or worse) can tell you that regulation should be considered as important to your business’ success as a good marketing strategy or hiring the right people. Before any major business move, take the time to investigate any associated regulatory requirements and ensure you’re following the law to the T.
Planning ahead includes setting aside time for record-keeping and any necessary reporting, training staff on an ongoing basis, and regularly reviewing policies to ensure they remain compliant with the latest updates in the law. More than a quarter of small businesses (27%) said they spend more than five hours per month working to ensure they are compliant with federal, state and local requirements. And don’t be afraid to ask for help if you need it. More than 40 percent said they turn to outside professionals, such as accountants and attorneys, on regulatory issues.
Beyond just following the laws, you have the opportunity to help shape them, too. One of the most valuable things you can do is to make your voice heard to lawmakers on regulatory issues that matter to you. On the national level, the U.S. Senate and U.S. House of Representatives both have handy directories to find the contact information for the lawmakers representing your state or district. Here’s how to get in touch with the White House.
And don’t forget that some of the regulations that have the highest impact on your small business aren’t created in Washington, D.C. They’re decided in your local city hall or state capitol. Keep an eye on your local media and get involved by attending public hearings, speaking before committees, contacting elected officials and writing letters to the editor of your local newspaper. If you’d like to get even more involved, you can also consider joining a local advisory board or commission, which are often comprised of volunteer members of the community.
Louis DeNicola is the president of LD Money Media LLC and an experienced finance writer who specializes in credit, personal finance, and small business finance. Within the small business sphere, he helps business owners understand their financing options, cash flow management, business credit, and taxes. In addition to Funding Circle, you can find his work on BlueVine, Credit Karma, Experian, Wirecutter, and Lending Tree.