Inc.com reports that because many costs are fixed, small businesses pay about a third more per employee than larger companies, finds the SBA.
Businesses with 20 employees or fewer pay 36 percent more than their larger counterparts (defined as those with 500 or more employees), says the report — called “The Impact of Regulatory Costs on Small Firms” — from the SBA’s Office of Advocacy.
This is because a lot of costs are fixed — the same whether you have two employees or 2,000. Total annual cost of following the rules for a small business: $10,585 per employee, or about $2,830 more than big business.
Businesses with 20 to 499 employees paid about $7,454 per employee, or about $300 less than the largest companies.
“That is an unfair burden to place on American small business,” said Winslow Sargeant, the SBA’s chief counsel for advocacy.
The report estimates that 89 percent of all firms in the U.S. employ fewer than 20 workers. By comparison, large firms account for only 0.3 percent of all U.S. firms.
Photo by nkzs.