It’s Only Going to Get Worse for Small Business Employers





A recent study by Congress suggested that the average small business spends 80 hours and $10,000 per year on federal compliance alone.

The trend is not in our favor my friends.

Consider the following:

  • Recent proposed regulations on overtime will increase the number of exempt employees eligible for overtime.
  • The Department of Labor radically liberalized its definition of employee, meaning many independent contractors will have to be reclassified.
  • The Affordable Care Act (ACA/Obamacare) started to enforce penalties on health reimbursement accounts, temporarily suspending once Congress complained.
  • OSHA issued $69 million in fines in one year alone to small business employers.
  • Pressure is mounting to increase the minimum wage in many states to $15 per hour.

It is nothing new for the Federal government to use businesses as their enforcement and record keeping tools.

Since the dawn of the modern bureaucracy in the 1960s, more and more has been put on small business employers and businesses, and when those businesses are small, the burden is overwhelming.

Congress cries that small business employers create virtually all of the net new jobs in the country, and that things should change, but they don’t.  The march of big government is swallowing small business.

There may be a light at the end of the tunnel for small business, however. Technology.

Much of the compliance and record keeping can be greatly simplified with the right technology solutions.

It’s not going to come from the ADPs or Paychex-es of the world. The innovation is going to come from small business, itself.

New companies are springing up all over to help solve these problems.

Here are a few:

  • Xero: I’ve only reviewed this application, but it is simple, accessible, and cheap. There’s now no reason to not have good books.
  • Quickbooks: Intuit did a complete revamp of its online product, and it is markedly better than before. You can’t go wrong with this industry leader.
  • BambooHR: This is a good solution for small and medium sized businesses providing basic HR tools
  • Zen Payroll: This is the only stand alone payroll service I would recommend. If you’re not using a local company, Zen is the way to go.
  • Swipeclock: This is for simplified time and attendance. It’s easy enough for small companies, but has robust enough features to handle anything you want to throw at it.

Those are just a few.

There are a slew of technology startups working to solve these problems for small businesses. Many of them have Automated Program Interfaces (API’s) so that they can easily share data with other software.

The startup I’m currently working with is looking at platforms that integrate existing software and services to allow one point of entry for small business employers. But again, let me be frank, all of us small business owners are going to have to work very hard to stay ahead of the curve.

There is too much money on the table for the state and federal governments to ignore.

Actually, I think with the advent of new technology, governments will just increase their complexity and requirements. Consider the income tax code.

There is literally no way that the tax code could have grown in the complexity it has over the last 30 years if technological advances hadn’t supported it.

Do you think small businesses or their CPAs could do a tax return by hand now like many still did 30 years ago? Heck no! And so I see it with small business employers.

Adopting better technology in employee management is no longer an option, it is a must.

U.S. Congress Photo via Shutterstock

2 Comments ▼

Christian Brim


Christian Brim Christian Brim has worked with thousands of small business owners over his 20+ career. This work comes from his “why” of helping small business owners reach their full potential, helping them have clarity in their business decisions, and to keep the business working for them, not the other way around.

2 Reactions

  1. I too am grateful for tech improvements, but I really wish we could get some alleviation of the problem instead of just treating symptoms.

  2. “The Economist” July 25th edition published a good story entitled “A Reckless Wager” on the potential [negative] impact on raising the minimum wage to $15.00. Over-regulation of business is a burden that is passed on to consumers.

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