With smiling small business owners surrounding him, Donald Trump held a ceremony to sign one of his many Executive Orders on his tenth day in office. This Executive Order was drafted to keep one of Trump’s campaign promises of cutting regulations for small businesses. It’s a nice show, Mr. Trump. But that’s mostly what it is: a show.
“This will be the largest ever cut by far in terms of regulation,” Trump said. “We want to end the unfairness between small and big business caused by regulation.” The Executive Order would require federal agencies to eliminate two regulations for every new one they enact.
Cutting regulations affecting small business would be nice indeed, but as with most things in government – and especially with this Administration – the devil’s in the details.
Now, Trump’s Executive Order to eliminate two existing regulations for every new regulation is a little like someone telling me I have to get rid of two items of clothing from my closet for every new one I buy. Bring it on. I can (and, let’s face it, should) easily get rid of stuff I haven’t worn in years, no longer fits, is no longer in fashion. And then I can go to town shopping for new stuff. Woohoo.
It’s a nice gesture, but, in the end, almost meaningless. There are probably plenty of regulations that haven’t been enforced in years, are no longer applicable, or really don’t make much difference. Any bureaucrat worth their government paycheck can find old regulations to put in the dustbin while creating new ones.
More importantly, the regulations that most affect small businesses happen at the local or state level. Want to open a hair salon? You’ll probably need a cosmetician’s license from your state, and building permits and licenses from your city. Sure, some federal regulations cover the safety of ingredients in your hair care products, but they almost certainly don’t impact you on a day-to-day basis. The big beneficiaries of regulation cuts and lax enforcement? Big corporations, not small businesses, such as that big manufacturer of hair care products required to make sure those products are safe, protecting your salon’s patrons.
If Trump really wanted to help small businesses reduce the burden of regulations and paperwork, he could take these meaningful steps:
- Expand the “Startup in a Day” program. In 2015, the Small Business Administration (SBA) launched a program to help cities, counties, and states streamline their licensing and permit processes. The program was designed to help these entities create easy web portals enabling those starting a small business to apply for all applicable permits in 24 hours or less. Helping cut through local red tape means more businesses get up-and-running sooner. Let’s hope the new SBA Administrator supports this initiative.
- Create a standard tax deduction for sole proprietors. Probably the biggest federal paperwork headache for small business owners has to do with keeping track of everything needed to prepare income taxes. Since the largest percent of small businesses are one-person companies, a standard deduction based on a percent of total income would eliminate a ton of paperwork for a whole lot of sole proprietors.
- Expand support for Small Business Development Centers (SBDCs). Many small business owners need personalized assistance. SBDCs offer free counseling and low-cost training, including helping entrepreneurs navigate regulations while also growing their companies. Some SBDCs provide export assistance, helping small businesses become government contractors, or affordably improving their environmental practices.
- Help small businesses adopt technology solutions. Many small businesses are still bogged down in paperwork because they haven’t adopted the technology to cut through it. For example, payroll can be a huge paperwork and tax headache. But I do my company’s biweekly payroll in only a few minutes because I use an affordable online payroll solution—Intuit Online Payroll.
Of course, with this President one also has to wade through “alternative facts,” such as his comment during the Executive Order signing ceremony, that it’s “almost impossible now to start a small business and it’s virtually impossible to expand your existing business because of regulations.” In reality, about 679,000 entrepreneurs started employer businesses between March 2014-2015, and over 800,000 “non-employer” businesses—or sole proprietors—started between 2013 and 2014.
Copyright, Rhonda Abrams, 2017
This article originally ran in USA Today on February 8, 2017