- 68 new regulations are introduced on a daily basis.
Starting your own business may sound like something exciting to do, but be forewarned, it can be a challenging and painful experience. Most fail during the first year of operation. There is more to it than just renting a store front and beginning to sell products and services. Much more. In addition to labor and materials, there are a considerable number of laws, rules and regulations to contend with, to illustrate:
FLOOR SPACE - Most start-ups will lease office space as opposed to purchasing or constructing a new building. This is perhaps the lesser of two evils, yet there are still rules and regulations to be observed with the landlord and local government, such as smoking policies, trash removal, use of utilities, etc. If you elect to build a new office, there are countless construction rules and regulations to contend with; everything from producing blueprints, civil engineering, easements, not to mention numerous inspectors to check on materials, safety, plumbing and electrical, sewage, roofing, and many other concerns. Local governments have strict rules for displaying business signs as well. Your occupational license means the building is suitable to conduct business, but you still must observe numerous fire, health, and safety regulations.
CONDUCT BUSINESS - to legally conduct business, your organization must be registered with the Secretary of State (of the state you reside) and the Internal Revenue Service (IRS) who identifies you as the type of corporation you are, such as a Subchapter S, an LLC, a nonprofit, or whatever. Such classification defines what types of activities you may perform. Depending on the nature of your business, you may need certain permits and certificates, such as a contractor's license, an operator's license for special equipment, a certificate denoting bonding, insurance, etc. You may also require clearance from a federal or state government agency such as the EPA, FDA, FCC, FTC, FHA, and E-I-E-I-O. Not surprising, you will be asked to routinely report on your activities to these bodies.
Conducting business also means issuing invoices for products and services rendered; translation, you will probably have to report sales tax to the government. In terms of payroll, you will have to make deductions and report on Social Security, Medicare, Unemployment, and now health care. Each employee has to be defined in terms of their status, such as exempt versus nonexempt, full-time versus part-time, all of which denotes how much time they can work and how they should be compensated. There may also be unions involved which will likely incur additional work restraints.
A Bail Bondsman in Florida recently pointed out to me the numerous regulations he has to operate under, starting with Florida Statutes Chapter 903, and Chapter 648. Such voluminous laws and rules make his business one of the most regulated I've run across. However, I'm sure others would argue their industry is much more regulated, such as the medical field.
As a business owner, you cannot claim ignorance of the law (Latin: "ignorantia legis neminem excusat"). As such, it is important to stay abreast of the laws, rules, and regulations which impacts your business, which can be substantial. To illustrate, see USA.gov Laws and Regulations.
In November 2012, CNSNews reported(1) an average of 68 new regulations were being introduced on a daily basis by various government agencies. This was based on a study of the government's Regulations.gov website which allows visitors to find and comment on proposed regulations and related documents published by the federal government. This means, approximately 25,000 new rules and regulations are being issued each year, a staggering number by anyone's estimation. This means business, which is responsible for generating capital to fuel the economy is being kept on a very short leash, one that thwarts growth and expansion.
Why so many rules? One cannot help but wonder if it's to protect consumers or to justify the existence of government. Frankly, I think it is a prime example of "Parkinson’s Law" whereby "work expands so as to fill the time available for its completion," hence the need for government bureaucracy.
I write this column not to discourage entrepreneurs but to point out the harsh reality of conducting business today, which many employees and young people do not comprehend. This means there are considerable risks associated with starting and running a business as the owner becomes legally responsible for not only producing a marketable work product, but adhering to the massive laws, rules, and regulations he must operate under. Should the business turn a profit, he/she is entitled to reap the rewards, deservedly so I might add. Just remember, managing a business is most definitely not for the faint of heart.
Keep the Faith!
1 - "6,125 Proposed Regulations and Notifications Posted in Last 90 Days--Average 68 per Day" (Nov 9, 2012)
1 - "6,125 Proposed Regulations and Notifications Posted in Last 90 Days--Average 68 per Day" (Nov 9, 2012)
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Tim Bryce is a writer and the Managing Director of M&JB Investment Company (M&JB) of Palm Harbor, Florida and has over 30 years of experience in the management consulting field. He can be reached at timb001@phmainstreet.com
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