Many of you have decided that you are going to attempt to start a business in the United States today. Many of you are still convinced that this is “the land of opportunity” and that starting a business is fairly easy. Are you sure about that? Are you certain that you have considered all of the headaches involved? Are you sure that you are ready to handle the thousands of regulations that apply to your business and the mountains of paperwork mandated by various levels of government? Are you prepared to deal with entrenched unions, predatory lawyers and rabid environmentalists? The truth is that the business environment has never been this toxic in all of U.S. history. So even if you are able to start a viable business that can compete with the monolithic global corporations that dominate our economy, you still might not be able to make it. In the end, thousands upon thousands of businesses across America have been doomed to failure by ridiculous regulations, mountains of paperwork, health insurance costs, predatory lawsuits or corrupt government officials. So do you really think that you can beat the odds?
Historically, small businesses have been the driving force behind America’s economic growth. But today, we have made the business environment so complicated that small business owners are being completely smothered by red tape.
The following are 10 areas that anyone wishing to start a small business had better think about before moving forward. When you really stop and think about it, the fact that anyone out there is still attempting to start small businesses in America today is absolutely amazing.
If you plan to start a business in America today, you better get a hold of a good lawyer. In fact, if you want to be safe, you better get a small army of lawyers. You are going to need an expert on the federal regulations that apply to your business, you are going to need an expert on the state regulations that apply to your business and you are going to need an expert on the local regulations that apply to your business.
There are going to literally be thousands of regulations that apply to any business started inside the United States today. There is no way that you will ever be able to learn them all. Not only that, but the truth is that your lawyers will only be aware of a small fraction of them.
Do you know what the Federal Register is? The Federal Register is the primary source of regulations for U.S. government agencies. In 1936, the number of pages in the Federal Register was about 2,600. Today, the Federal Register is over 80,000 pages long. That is just one example of how bad things have gotten.
So what do you do? Well, just do your best to try to learn about the major regulations that apply to your business and pray that you don’t end up violating some important regulation that you are not even aware of.
Do you know what paperwork the federal government expects you to fill out? Do you know what paperwork the state government expects you to fill out? Do you know what paperwork the city or the county expect you to fill out? Do you know what paperwork you will be required to fill out when hiring a new employee?
The truth is that the paperwork burden on small businesses has multiplied in recent years. Many small business owners are so swamped with paperwork that they barely have time to conduct their actual businesses.
For example, the U.S. Food and Drug Administration is projecting that the food service industry will have to spend an additional 14 million hours every single year just to comply with a new federal regulation that mandates that all vending machine operators and chain restaurants must label all products that they sell with a calorie count in a location visible to the consumer.
14 million hours just to comply with one ridiculous regulation? Yes, that is how bizarre things have gotten in America in 2010.
#3 Fees And Fines
Many small business creators in America are absolutely horrified to learn of the fees and fines that they must pay before they can ever even open their doors. Much of the time it is revenue-starved local governments that are the biggest culprits.
For example, a reader of this column named Gene recently shared his regulatory horror story with us….
Started a new business this year in AZ. Paid over $10,000 in fees for permitting, $10,000 in fee for elec hookup, $10,000 in fees for gas hook up and an extra $200 fee per month just for the “privilige” of having gas. Adding up all the fees to start our business, I don’t think we would do it again. We are now just getting to the point that we are making our bills each month, and so we are not taking a paycheck, and don’t anticipate one for at least another year. Our family has been in business for ourselves for decades,and we know what we are doing, but the rising fees caught us off guard. Cities, municipalities, counties and states are raising all fees at astronomical rates to help offset the slump in their real estate income (since banks apparently don’t have to pay real estate taxes)…I’m telling you every business person I know is on their last leg.
The United States has one of the most (if not the most) repressive business taxation scheme in the world. As a small business owner, do you know what taxes you will be expected to pay? It is not just federal income taxes and state income taxes that you will be paying. In a previous article, I detailed the various forms of taxes that Americans pay each year and most of them apply to small businesses as well….
Accounts Receivable Taxes
Building Permit Taxes
Capital Gains Taxes
CDL license Taxes
Corporate Income Taxes
Court Fines (indirect taxes)
Dog License Taxes
Federal Income Taxes
Federal Unemployment Taxes (FUTA)
Fishing License Taxes
Food License Taxes
Fuel permit taxes
Hunting License Taxes
Inventory tax IRS Interest Charges (tax on top of tax)
IRS Penalties (tax on top of tax)
Local Income Taxes
Marriage License Taxes
Real Estate Taxes
Recreational Vehicle Taxes
Road Toll Booth Taxes
Road Usage Taxes (Truckers)
Septic Permit Taxes
Service Charge Taxes
Social Security Taxes
State Income Taxes
State Unemployment Taxes (SUTA)
Telephone federal excise taxes
Telephone federal universal service fee taxes
Telephone federal, state and local surcharge taxes
Telephone minimum usage surcharge taxes
Telephone recurring and non-recurring charges taxes
Telephone state and local taxes
Telephone usage charge taxes
Toll Bridge Taxes
Toll Tunnel Taxes
Traffic Fines (indirect taxation)
Trailer registration taxes
Vehicle License Registration Taxes
Vehicle Sales Taxes
Watercraft registration Taxes
Well Permit Taxes
Workers Compensation Taxes
#5 Health Insurance
Do you know if you will be required to provide health insurance for your new employees? Have you familiarized yourself with the new 2,409 page health care law enough to be able to set up a health insurance program?
As a result of the new health care law, health insurance premiums for employees are shooting through the roof. Are you going to be able to afford them? Would it be better to have fewer employees and work each of them harder so that you won’t have to provide health coverage for as many people?
Will you be able to compete with the companies in your industry that have received waivers from having to comply with the new health care law?
In the United States, our system places the burden of providing health care on to the backs of employers. So are you ready to handle that burden?
Will the employees of your new business need pensions? Do you know how to set up a 401K program? Do you know what defined benefit plans are?
You can literally sit through an entire law school course on pension law and still understand virtually nothing about the subject. The truth is that if you plan to provide your employees with some kind of pension program you had better hire someone who can at least pretend that they know what they are talking about to set it up for you.
#7 Foreign Competition
Especially if you are creating a small business that does manufacturing, you are going to have to deal with foreign competition.
So are you going to be able to compete with the companies in your industry that pay their workers on the other side of the world less than a tenth of what you are paying to your American workers?
On the other side of the world, companies often don’t have to worry about unions, worker’s comp, health benefits, retirement benefits, nightmarish environmental regulations, crushing taxes or miles of paperwork and red tape.
Are you certain that you can compete against that?
The more successful you become, the more inviting of a target you are going to be for predatory lawsuits. The truth is that the courtrooms of America are packed with thousands of them, and the lawyers that bring them are hardly ever held accountable.
All of your hard work can go down the drain in a single moment. There are hordes of lawyers out there that make their living by filing lawsuits against small to mid-size businesses.
The truth is that if you are running a small business, you are probably doing something wrong.
Just hope and pray that a predatory lawyer does not find out.
Protecting the environment is a good thing. Unfortunately, there are many radical “environmentalist” groups that consider it to be a bad thing that humans even breathe because it produces carbon dioxide.
When Audi ran their now famous “Green Police” commercial during the Super Bowl last year, most Americans laughed it off and thought that nothing like that could ever happen in America. Well, it turns out that it is happening in America.
Not only are government environmental regulations totally nightmarish at this point, but there are a growing number of radical environmentalist groups that are running around the country filing lawsuits against whoever they feel like.
#10 The Federal Government
Are you prepared for a federal government that can literally change all the rules at any time?
Many businesses across America are frozen in their tracks at this point because they don’t know what Obama and the U.S. Congress are going to do next.
The truth is that things are getting really bizarre in this country. For example, federal agents recently raided an Amish farm at 5 A.M. in the morning because they were selling “unauthorized” raw milk.
If federal agents will raid an Amish farmer at 5 AM in the morning over some raw milk, do you think that they are going to have any mercy on your small business when the time comes?
The America that once embraced “free enterprise” and the entrepreneurial spirit is dead and gone.
Now we are a country filled with bureaucrats and red tape from sea to shining sea.
Is it any wonder why we can’t compete with the rest of the world?
Is it any wonder why so many millions of Americans are unemployed and can’t find jobs?
In an attempt to “solve” our problems we just keep passing more “reform” which means even more rules and regulations for our businesses to follow.
Just as they are doing on an individual level, the government is attempting to watch, track and control everything that our businesses are doing.
Everywhere you look in American society today, the government is gradually tightening the steel-fisted grip that is has around everyone and everything. Pretty soon you won’t even be able to sneeze without the government telling you how to do it correctly.
Is that really the kind of society that we all want to live in?
What a nightmare.
Do you have a horror story from starting a business in America that you would like to share? If so, please feel free to post it in the comments section below….