If you think you’re doing more paperwork than ever before, you’re not alone. According to a new Small Business Index report released this week from MetLife and the U.S. Chamber of Commerce, 37 percent of business owners say they spend more time on licensing, compliance or other government requirements, up from 29 percent last quarter.
The papers began piling up during the pandemic, when businesses began applying for funding through government assistance programs such as the Wage Protection Program, and workers began asking for more sick leave because of Covid. While this seems reasonable, the time businesses spend filling out forms is likely to increase in the coming months as federal agencies seek to impose more regulations and enforce them.
In March, the Securities and Exchange Commission proposed rule changes that would require registrants to include information on some climate-related risks on their registration statements and quarterly reports. Small businesses say the regulator’s climate disclosure proposal would burden them with a compliance burden they can’t handle, according to the Wall Street Journal. While small companies don’t usually fall under the SEC’s purview, they fear they will be forced to lay out a bunch of information about their role, however small, in carbon emissions because the SEC wants large public companies to catalog emissions throughout the supply chain.
“Small and independent businesses cannot afford the experts, accountants and lawyers needed to comply with complex government reporting regimes,” the National Federation of Independent Business said in a comment filed with the SEC.
In addition, the Federal Trade Commission and the Consumer Financial Protection Bureau are developing additional rules and regulations. Director Rohit Chopra told the Senate Banking, Housing and Urban Affairs Committee in April that the CFPB “will dramatically increase the production of its guidance documents, such as advisory opinions, compliance bulletins, policy statements and other publications,” to ensure businesses comply with the rules. For small businesses without a full staff or legal teams to keep up with the extra paperwork and unnecessary bureaucracy and regulations, these changes could become a harsh reality.
“[Small businesses] are going through a seemingly endless debate about changing rules and shifting incentives that threaten their fundamental ability to create, build and grow the businesses that will sustain our economy,” said Joe Chamess, general partner at Flintlock Capital, during testimony before the House Small Business Committee at the June 2022 Veteran Entrepreneur hearing.
Meanwhile, a rare opportunity to challenge the federal government’s ability to control corporations is beginning to emerge. Some compliance observers suggest that a recent Supreme Court decision in which the Environmental Protection Agency was found to have exceeded its authority to limit carbon emissions from power plants could help ease the bureaucracy in other cases. Similar cases involving the Clean Water Act in particular may have similar precedents.
