In April 2011, federal agents raided several Chuy's Mesquite Broiler restaurants in Arizona and California. It was the culmination of an extensive investigation into alleged tax fraud and illegal hiring practices. The restaurants folded not long after, and the owners could face up to 80 years in prison and millions of dollars in fees.
"It was completely devastating," said Mike Dubreuil, who owns the trademark rights to the restaurant chain.
Chuy's is just one of many companies who have found themselves on the wrong side of government action. Keeping track of--and abiding by--the often mind-bogglingly vast slew of federal, state, and local laws is an everyday endeavor for business owners. It can be hard to keep up. But, the reality is: ignorance of regulations, let alone outright disobedience, can spell disaster.
According to the U.S. Office of Management and Budget, 555 new "significant" regulations--ones with a price tag of more than $100 million in a year--were enacted in 2009 and 2010 alone. In the last 90 days of President Obama's first term, thefederal repository for regulation changes posted 6,120 regulations and notices--an average of 68 per day!--whichinclude not only proposed and finalized rules but thousands of pages of jargon that small business owners must monitor, translate, and then implement correctly.
There are rules about taxes, fees, construction, and environment--not to mention everything that comes with hiring employees: health care, safety, equal opportunity, immigration and much, much more.
Recent polls show that most small-business owners rank government regulations as their top obstacle. For the millions of America's small businesses, compliance is not only stressful and time-consuming, it's also costly. According to the most recent Rocket Lawyer Small Business Index, the number one legal cost facing small business is compliance with government regulations.
So why are the companies who serve as the backbone of our economy so over-regulated and over-burdened? It's not clear, but fortunately, there is some good news.
First, the United States still ranks as one of the best countries to start and run a business. Second,statistics show that the pace of new regulations has slowed, as Washington is making strides to alleviate burdens. Having recently rolled out "hundreds of initiatives that will reduce costs, simplify the system, and eliminate redundancy and inconsistency,"said Cass Sunstein, administrator of the Office of Information and Regulatory Affairs, the White House estimates these changes will save businesses $10 billion over five years. Thankfully, many of the new reforms focus on small business.
Despite the burdens, businesses can benefit from the government. In addition to the $30 billion in federal funding from the Small Business Jobs Act of 2010, the SBA guarantees $12 billion in loans per year and offers incentives such as tax credits. Grants from government agencies also play a key role in helping companies get off the ground, such as the start-up robot company Barobo, which received more than $500,000 in funding from the National Science Foundation to help developtheir lab technology into a commercial product.
How does your business fit in? You probably experience a combination of both burdens and benefits from the government: You have tons of rules to know and follow and, even if you haven't taken advantage yet of government programs and incentives, you know that lots of them exist.
It's our goal with this new column on Inc.com, dubbed K & Main, to help you sort through it all. I hope to help equip you with a firmer understanding of the rules laid out by the government for small business. I also hope to open your eyes to new opportunities as they emerge, as well.
CHARLEY MOORE is the founder of Rocket Lawyer, the simple and affordable online legal service that is used by millions of businesses, entrepreneurs, lawyers, and individuals for any legal situation, world-wide. @charleymooreesq