But business owners know that scrapping some regulations and tweaking others can help benefit the bottom line, leading to growth and new hiring.
To find out what regulations business people find most troubling, we turned to Jim Nelson, executive director of the Nevada Association of Employers; Mike Bosma, a Reno-based CPA and host of “Bosma on Business” on News Talk 780 KOH; and Randi Thompson, state director for the National Federation of Independent Business.
All found it hard to pick just one regulation to upend, but when forced to decide, here are their responses.
It’s very difficult to pick just one topic, as there are countless that have a negative impact on business. However, the National Labor Relations Board (NLRB) has been making lots of headlines lately with their rules making it easier for unions to organize, requiring employers to post notices telling employees of their organizing rights and their decisions regarding employers taking action against employees who post negative comments in the social media.
I think one of the major constraints on growing business these days are the efforts of the National Labor Relations Board to make it easier for unions to organize employers. The failure of the Employee Free Choice Act (EFCA) was significant to business and we as a business community are glad for that. However, the NLRB has the mindset to incorporate into regulations that were intended within the unsuccessful EFCA. In this very difficult period in our history, business owners need to be able to focus on running their business without having to look over their shoulder all the time wondering what the NLRB is going to do next.
If I had to choose only one, it would have to be the federal income tax. If a company meets the qualifications of an electing small business corporation, they can file a Form 1120S. The instructions state that in order to do the recordkeeping, learning about the law, preparing the form, assembling the return, and the schedule k-1 to report the income to the shareholder, on average, would take over 180 hours. This is over 22 days, or roughly the equivalent of a full work month just to report the taxable income from the business. Note that this does not include calculating and paying tax (this is generally done at the shareholder level), or any employment related taxes, any state level income, sales, property tax, etc.
The audit rate for these returns is generally 1 to 2 percent of the total returns filed. With the Herculean effort required to learn and complete the form, most businesses simply don’t get it right. They only find out how wrong it is when they get audited (or become clients of Bosma Group and we fix it). If audited, they generally are faced with stiff penalties that require an unexpected exodus of cash to pay.
The recession should have resulted in more entrepreneurs. The only reason I can think that people have not rushed to start their own business is knowing from inception that they can’t invest enough time to learn the rules to run the business correctly, and above board, so why try?
Currently, it would take longer to comply with the laws in a business then actually run a business. Start with the income tax and make it simple for most businesses, but then streamline them all, including those for big business. We will inspire innovation through entrepreneurship,and keep our distinct competitive advantage.
My top regulation to repeal: employer health insurance mandate.
The employer mandate slated for 2014 is a key element of the Patient Protection Act. It requires companies with 50 or more employees to provide health benefits or face a penalty of $2,000 per employee.
The employer mandate already shows signs of prompting unintended consequences. A number of major corporations are considering dropping health care coverage — the premiums for which are escalating under other provisions of the law — in favor of paying the penalty. Either way, the employer mandate constitutes a major new tax on business, the costs of which will be borne by workers and consumers in the form of lower wages, job losses and higher prices for goods and services.
This regulation generally ranks in first place on most polls of business owners when asked what regulation concerns them the most.