The Impact of Government Regulation on Small Businesses in the United States


Table of Contents


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CHAPTER 1:  Introduction 2

1.1 Brief Background 2

1.1.1 Possible Research Bias 3

1.1.2 Why or why not? 3

1.1.3 Areas the paper incorporates research the best? 4

1.1.4 Areas to Revise 4

1.1.5 Specific Areas of the Paper 4

1.1.6 Challenges Encountered 4

1.1.7 Important aspect learned 4

1.1.8 High-stakes professional setting 5

1.1.7 Questions on Process 5

1.2 Problem Statement 5

1.3 Purpose statement 5

1.4 Research questions 6

1.5 The Significance of Study 6

1.5.1 Business Permits and Licensing 6

1.5.2 Taxes 7

1.5.3 Consumer Advertising 7

1.5.4. Environmental Legislation 8

1.5.5 Employment Laws 8

1.5.6 Discussion 8

CHAPTER 1:  Introduction 

Governments across the world establish numerous policies and regulations whose main objectives is to guide business establishment and operations. Rules such as minimum wage and zero tolerance to discrimination are mandatory and should be adhered to by all business entities in the United States, while other policies and regulations may influence a business entity indirectly. For this reason, it is essential for business owners and their management teams to make sure that they are conversant with all rules and regulations that may impact their businesses either directly or indirectly (Amor, 2018). Business organizations need to be flexible enough to enable them to adapt to the ever-changing rules and regulations without losing their competitive edge. This is true because these regulations are made on different levels such as the federal, state, and municipal levels, and for this reason, an organization should ensure that they adhere to all the regulations set. Government regulations on small businesses change regularly based on the prevailing situations and restrictions in terms of business permits and licensing, taxes, consumer advertising, environmental legislation, and employment laws determine the success of a small business.

1.1 Brief Background

Issuance of business permits has remained crucial to the performance of markets, as such there are policies, regulations, and compliance aspects that govern the regulation especially in critical businesses such as health and sanitary (Allen & Koshima, 2018). The government hopes at improving business requirements by regulating capital for full compliance with standards. While laws such as OSHA guide towards the best regulation, permits and licenses (Schröder, 2015), licensing requirements for a hygienic, safe and nourishing environment are based on the investment criteria, which surrounds sales taxes.

However, the specific focus on the influence of government regulation on small businesses given they are privately owned partnerships, corporations and sole proprietorships that have at least 50 employees and below. Small businesses are hybridized to their respective industries, but most of them often have a large product category, with quite a good number of them acting as retailers for producers. They play an extremely crucial section of the economy since this where Firms meet Consumers, subsequently, the Government acts as the regulator within the different levels of the supply chain.   

The governments establish regulations and policies useful at guiding minimum wage while ensuring that payment remains compulsory. Given businesses are meant to remain profitable, they prefer being flexible working towards a policy of regulating market catalysts, promoting political stability and inspiring a sound social and economic performance (Frolova, 2016). The government depends on the direct and indirect taxes that the business collects. However, given the possibilities of having tax evaders operating amongst taxpayers, regulations would help control economic anarchy. However, when considering the state of small businesses, regulations are streamlined to improve their ability to render sound and moral businesses practices.  

1.1.1 Possible Research Bias

The research targets the battlefront of cost and regulations surrounding permits and licenses affecting how a small business operates. Categorically the research targets costs and regulations on permits and licenses, taxes, consumer expectations, environmental legislation and employments, all critical all that can build or destroy an organization, more so under arguments of climate change compliance (Kaplow, 2010). Currently, Democrat and Environmentalists, Tom Steyer is accusing Trump’s regime of empowering corporates, how he puts it is that there are possible abuses of environmental laws and morality expectations (Dreams & Jake Johnson, 2019). This research remains as wide as it is narrow as there are almost dozens of court cases concerning the targets of the research. There are also parallel scholarly research most illustrating that several problems act as potential challenges to small businesses.

1.1.2 Why or why not?

The research remains biased to estimate the scope of the hypothesis. Although the researcher is yet to do literature that will provide birth to a hypothesis and literature gap, the research questions are useful guidelines towards understanding business challenges, each categorically. A literature review would be hopeful at revealing the key challenge and possibly quantify the challenge. Questions of ease of doing business 

1.1.3 Areas the paper incorporates research the best?

I believe the nation has the best policies concerning the ease of doing business. The US remains one of the most civilized countries in terms of Gross Domestic Products and Purchasing Power Parity. The concern is therefore deeply incorporated in the strategies of regulation that are making the US lose the war to China. Are there laws that are overstated and other understated. The concern remains deeply on the best approach of incorporating ideas. 

1.1.4 Areas to Revise 

 exaggerated some of the areas in my paper, especially the significance of the study. Somehow, the significance of the study seems to be introducing the literature, illustrating that I was eager to find out what other researchers expected. The significance of the study can be summarized in bulleted points, and still, make a huge impact. Meanwhile, I also need to revise the Problem Statements (Guffey and Loewy, 2011). We are in this globe to identify and solve the problem. Given a problem is jointly shared within the society, the problem statements remain detailed and diversified to incorporate different events. 

1.1.5 Specific Areas of the Paper

As noted, the part from the Business Permits and Licensing needs and later sub-sections needs to be transferred to the Literature Review section. However, that content needs to be strengthened, with theories and a specific narrative based on the theories taking precedence. Although it is not mandatory to influence a theory inside research, it remains remarkable in clustering the problem before a more detailed scholarly evaluation. 

1.1.6 Challenges Encountered 

In trying to mine the right content online, there were costs and logistical challenges as most of the good journals are sold. However, there is quite a huge library of free materials. For Google Books, all the good materials had copyrighted page numbers. Apart from the source of the research, there is also a diversity of library collection, one needs to be specific on what exactly will be beneficial in terms of supportive in-text citation. Besides, there should be a clear scope of the research guiding projections. 

1.1.7 Important aspect learned

There is a great diversity between laws, policies, regulations and compliance, but they do work together each presenting the various authority, and morality levels. Tackling this assignment will help question whether the United States is treated fairly towards the external market, especially considering the back-to-back loss of key technology pillars. Tetelbaum (2008) also introduced the insurance level of fallouts, noting principally the need to determine efficient towards tackling policy structure. 

1.1.8 High-stakes professional setting

Already some of the key ingredients for a quality hypothesis have been established including the research questions, problem statements and lately the background and recommendations borrowed from to significance of the study. A significance of the study, as well as the limitations of the study under chapter 1, would make significance advantages in constructing a reliable professional setting 

1.1.7 Questions on Process

There could be a dilemma if the Hypothesis proves false, that our research is a mere belief, other researchers have already delivered on the piece of materials.

  1. Problem Statement

The primary role of the government in any economy is to provide regulations and policies that can help bring about an environment that is devoid of anarchy. Controls help bring law and order, which is what enables business organizations to prosper. This is the main reasons why the United States is interested in the regulation of small business enterprises in the country. However, these regulations have led to some impacts that have affected businesses positively or negatively (Statisca, 2019). Therefore, the purpose of this research paper is to discuss the impact of government regulations on small business enterprises. It will also be vital for the article to determine whether these impacts have had positive effects or negative effects on the business organizations in the country.

1.3 Purpose statement

The purpose of this study is to discuss the various methods the United States government uses to regulate small business organizations and the impacts of these regulations on the business entities. Small businesses are subject to regulations in the form of business permits and licensing, taxes, consumer advertising, environmental legislation, and employment laws. Therefore, this study unravels the regulations and costs associated with each regulation and how they benefit or derail starting and operating a small business. 

1.4 Research questions

  • How does cost and regulations on permits and licensing affect the opening and running of small businesses?
  • How does cost and regulations on taxes affect the opening and running of small businesses?
  • How do regulations on consumer advertising affect the opening and running of small businesses?
  • How do the regulations on environmental legislation affect the opening and running of small businesses?
  • How do the regulations on employment laws affect the opening and running of small businesses?

1.5 The Significance of the Study

The importance of this study is that it will make an excellent contribution to the topic. The paper will give a good discussion as to why the government should regulate small business enterprises in the United States and the impacts of these regulations on business ventures and the economy as a whole.

1.5.1 Business Permits and Licensing

Many businesses require licenses and business permits to operate. Locally, cities and county governments require that new businesses or companies acquire permits and licenses to operate in their jurisdiction. (The United States, 2018) For instance, restaurants are required to have permits that show that they comply with the stated government regulations in health and sanitary. Additionally, the state or federal government issues new businesses like gun shops, bars, radio stations, and vets and doctors with speciality licenses (Iliev and Vitanova, 2019). To acquire this information, one can visit the specific state chamber of commerce or networking group of a specific industry. Moreover, this section will discuss how government requirements concerning permits and licensing affect small business (Vasudeva et al., 2015). Moreover, the amount charged to acquire the respective permits and licenses determines the number of businesses opened in a given area. Besides, this section will compare information on the requirements, the amounts charged to have specific permits and licenses and come up with a conclusion on the effect permits, and licensing requirements have on small businesses. Even though permits and licenses ensure that businesses operate in safe environments and the public is protected in terms of health and safety, they affect the rate at which businesses are opened. Other than business permits and licenses, taxes determine the level of investment in an area. 

1.5.2 Taxes

Paying tax is both good and painful. Sales taxes are paid for selling goods or services and paying income tax means that one has an income. Having to comply with tax regulations is another downside of tax that small business needs to comply with (Nguyen, Donohue, & Mehrotra, 2019). The regulations require that when employers pay their employees they take payroll tax. Besides, businesses should collect and pay sales tax based on their state government’s schedule. Furthermore, tax regulations require that one gets an employer identification number from the IRS to get business identification just like individuals are identified using the social security numbers. This section will also compare and contrast tax rates (Vasudeva et al., 2015), as well as tax exemptions and tax regulations of different states and find out the correlations between tax and rate of investment in specific states (Nguyen et al., 2019). Different states have different tax rates and tax regulations that small businesses have to adhere to, thus, determining the rate at which small businesses are started in a given state. Other than tax and tax regulations, consumer advertising plays a critical role in starting of small businesses.

1.5.3 Consumer Advertising

Virtually, consumer advertising must adhere to stipulated government rules and regulations. In this case, small businesses must ensure that when they advertise their goods and services, they are within the stated rules and regulations (the United States, 2018). The regulations ensure that no fraudulent claims are made. For instance, when promoting health products, science is needed to back up the claims. Furthermore, for microfinance businesses, it is required that rates and interests are reported accurately (Christopher, 2015). Complying with consumer advertising regulations requires deeper research and expertise, which increases business expenditure and in turn, can affect the pricing and profits from given products. The impact of government regulation on consumer adverting will be the area of focus in this section and results from different states will be given. Besides, having to adhere to consumer advertising regulations, meeting the environmental legislation requirements is important for any new and continuing business.

1.5.4. Environmental Legislation

Both the state and national governments have several regulations that small businesses must keep to ensure that the environment (soil, water, and air) is not polluted. Manufacturing businesses are required to follow regulations when disposing of wastes, smoke, and byproducts from their factory (Jan Adamiak, 2019). Additionally, white-collar businesses where a building is constructed, regulations controlling the amount of stormwater that can run off the building must be met to ensure that buildings are safe (the United States, 2018). Different states have different environmental regulations that must be met to ensure public safety. These regulations will be discussed here and their impact on small businesses investment in different states presented. Furthermore, after complying with the environmental legislation, businesses must adhere to employment laws implemented by the government.

1.5.5 Employment Laws

State and federal government stipulate rules and regulations that govern how employers should treat their employees. These regulations ensure that workers are not discriminated during the hiring and firing process based on their religion, race, ethnicity, age, gender, the nation of origin, and disability. Besides, when hourly employees work for over 40 hours a week, they are entitled to overtime pay (Vasudeva et al., 2015). Employees should also be provided with insurance to cover them when they are injured while on duty (Jan Adamiak, 2019). Other rules also require that employees are given time offs due to medical conditions and pregnancy. This section will, therefore, focus on specific employment laws in different states and find out their impacts on small business investment. 

1.5.6 Discussion

The role of the government in developing economies vary in phases of market reform. In industrialized countries like the U.S., the State highly regulates the pace of SMEs as it is a mature economy. This is because the government exerts external factors to influence the pace and the nature of small businesses rather than direct support. Chittenden, Kauser, and Poutziouris (2003) argue that the compliance cost of taxation in the UK and the USA follows the largest single element of the compliance burden for SMEs, which is similar in New Zealand and Australia. The countries have applied the model of simplifying initiatives and deregulation because there is no direct correction with tax regulations. 

Negotiating culture between workers and employers over time is important. The culture is to create understanding in a well-organized labour market, as well as where the legislator and the state have a detached and supporting role (Cagan & Simonyi, 2018). A rate from an organization with the high international comparison on both employer and employee side has underpinned the functioning and the legitimacy of the model. It is perceived that “compromise competence” built is a contradiction to the relationship between two portions of the labour market in many other places.  There should be fewer instances regarding inequality and great social security (Cagan & Simonyi, 2018). Proportional representations in the political negotiation culture foster a degree of pragmatism needs for compromises and chime labour market development (Larsen et al., 2015). The development resulted in well-functioning and prosperous societies.  

Healthcare system in the United States has a long heritage. It is well-established due to primary and preventive healthcare. As a result, it sophisticates occupational health standards. Moreover, the markets have less impact on the functioning of the healthcare system. Additionally, equality and equity are prioritized at the political level, as well as productivity and efficiency (Larsen et al., 2015).  For instance, Finland and Denmark have achieved minimum patients’ attendance time and improved hospital productivity. Additionally, Iceland, Norway, and Denmark do not charge variable hospital fee.

Protecting workers is inevitable for any business – especially precarious workers. Occupational Health and Safety Act (OHSA) sets minimum requirements concerning safety in the workplace: the Employment Standard Act (ESA) sets minimums protections like hours at work. Furthermore, the government introduced exceptions to workers from sectors like construction and agriculture. The workers have been protected from the employer’s misconducts like terminating their employment or punishing them when they complain. The laws are put in place to provide wide protection to the worker, and they are working to sort issues concerning the legal framework, as some temporary workers do not qualify for ESA benefits. Along with that, new protection programs should be created. Moreover, they should be influenced to join workers unions to express their problems as one group. It is also important to include precarious work in the country’s labour laws and the government should be influenced to do a review on alternative models to the traditional unions to help vulnerable workers in working environments.


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