Cleaning up the Regulatory Environment

September 01, 2015

Election season has begun in earnest, and with it increased emphasis on small and medium businesses. It’s nice to get a little bit of attention in the abstract, and there are plenty of issues that disproportionately affect small and medium businesses. Classification of workers as contractors or employees, immigrant visas, minimum wage. They’re all undoubtedly important, and deserve discussion. But one aspect that we at Supply Clinic have found particularly relevant is the regulatory environment.

Now I don’t mean to imply that industries are over-regulated (certainly some are, and others are under-regulated). What I’m saying is that the regulations are vastly more complicated, and the rules much more opaque, than they need to be. I’m holding out for a dose, however small, of simplicity.

Let me give you a brief example. Two bills have been proposed to allow the IRS to fill out individual tax returns (subject to revisions, of course), in order to simplify the process for individuals. Both bills failed. One of the major companies lobbying against it was Intuit, maker of TurboTax. Incidentally, Intuit also owns Quickbooks, a software package used by thousands of companies to handle accounting and taxes.

Corporate tax reform, too, would certainly be nice. As it is, a new entrepreneur has absolutely no idea what forms to file when, and how. It’s not just a board game- it’s a board game where the only people who know the rules charge a fee to explain them, and lobby the government against changing them. And most startups can’t really afford those fees.

But tax reform is only a piece of the regulatory changes needed to really simplify the messes we seem to have created. The challenge of navigating outdated laws is particularly cute for online businesses. It seems that at every turn, we run into 50 or 51 different sets of regulations, be it for the minutiae of sales and use tax or the sale of pharmaceuticals online. Which products are subject to what tax rates, where? Who needs a license to sell what in which state? Why is the paperwork so lengthy and complicated?

I could give further examples, but your eyes are already starting to droop and that Buzzfeed quiz beckons. Which is why, I suppose, we don’t hear very much about it. Oh well. There’s always 2020.