Doing business is very difficult. Having everything in place to hire people, pay them and keep them employed is a daunting task, especially for the small business owner. Government regulates and taxes businesses, which puts untold strains on the ability of small business to function and remain a going concern.

One business owner from New Jersey writes a small case study in the Wall Street Journal providing a real life example of one employee out of eighty-three in his small business and the total cost of keeping that person employed. I have adapted the business owners numbers to a table for easier reading and analysis below.

Paycheck	Employee	Employer
Gross Pay	$59,000
Medical and Dental Insurance	2,376	9,561
Unemployment Insurance	126
Disability Insurance	149	149
Medicare	856	856
State Income Tax	1,893
Federal Income Tax	6,250
Social Security Tax	3,661	3661
Life and other Insurance Premiums		153
Federal Unemployment Converage		56
Worker’s Compensation		300
State Unemployment Insurance		505
Net Income/Company Expense	$43,869	$15,241

When you add it all up, it costs $74,000 to put $44,000 in the employee’s pocket and to give her $12,000 in benefits. Bottom line: Governments impose a 33% surtax on the employee’s job each year.

I have worked for large companies and owned more than one small business with employees. Businesses are assigned the job of tax collector for the government, free of charge, while also paying taxes into the system. All a part of the cost of doing business but seldom seen by people looking from the outside.

The small business owner accurately states:

“To offset tax increases and steepening rises in health-insurance premiums, my company needs sustainably higher profits and sales—something unlikely in this “summer of recovery.” We can’t pass the additional costs onto our customers, because the market is too tight and we’d lose sales. Only governments can raise prices repeatedly and pretend there will be no consequences.

And even if the economic outlook were more encouraging, increasing revenues is always uncertain and expensive. As much as I might want to hire new salespeople, engineers and marketing staff in an effort to grow, I would be increasing my company’s vulnerability to government decisions to raise taxes, to policies that make health insurance more expensive, and to the difficulties of this economic environment.”

The government also raises the cost of doing business by imposing regulations on other businesses such as those in the health care industry.

Mr. Small Business owner is correct in his final assessment of owning and operating a business.

“From where I sit, the government’s message is unmistakable: Creating a new job carries a punishing price.”

Government punishes the small business owner and the employee. Government does not create jobs, it destroys them. Indeed!

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