Ever since the passage of the Corporate Transparency Act (CTA) in 2021, business attorneys (and, hopefully, small business owners) have been analyzing, preparing for, complaining about, and deciphering the CTA and the required beneficial ownership reports required by it. Recently, several events have increased the emphasis on the CTA, including the fast-approaching original deadline of January 1, 2025 for companies formed prior to 2024, and the
decision by a Federal Court in Texas to grant a nationwide preliminary injunction against the enforcement of the CTA. After having spent a year in the CTA trenches, I’ve seen first-hand how burdensome it can be for business owners to satisfy, and it piqued my curiosity as to the cost of complying with regulations as a small business owner in the United States.
The regulation burden in the United States – while having its merit for protecting individuals and consumers – is staggering. I recently reviewed a study conducted for the National Association of Manufacturers entitled “The Cost of Federal Regulation to the U.S. Economy, Manufacturing and Small Business.” In this study, the National Association of Manufacturers found that the cost of federal regulations to the U.S. economy totaled $3.079 trillion dollars (yes, trillion with a “T”) in 2022, with an average annual compliance cost to a U.S. firm of $277,000 dollars. For small manufacturers (as defined in the study), the cost was about $50,100 per employee to comply with these regulations.
This is not a surprise when you consider the sheer number of laws and regulations in effect in the United States. The U.S. Code contains 53 titles, totaling over 60,000 pages. If you were to print the U.S. Code on a standard 8.5” x 11” paper, using Arial 12-point font, you would need
over 31,744 square feet of floor space in order to lay the pages side by side. In addition, the Code of Federal Regulations has grown in recent years to total
185,984 pages 185,984 as of 2019.
Clearly, government regulation is a hot-button issue
in politics right now and there are valid points on both sides. Regulation is needed to protect U.S. Citizens and consumers, to incorporate food and product safety, worker safety, the list goes on. But in my opinion, the interests of the small business owner in the United States should be given greater weight, enabling entrepreneurs to pursue the American dream of owning a business without drowning in overly burdensome regulations.
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