Midsized Businesses Must Remain Vigilant about Compliance
It’s no secret that the past four years have been challenging ones for business. The near meltdown of the U.S. economy in 2008, followed by sustained high unemployment and unease, continues to affect businesses of all sizes. There has been little discussion, however, about the unique effects that these trying economic times have had on midsized businesses. In May 2012, the ADP Research Institute℠ conducted an online survey of 507 business owners, C-suite executives, and senior level executives in U.S. organizations with 50-999 employees to gain insight into their top business concerns. The survey results indicate a wide gap in respondents’ perceptions and experience in the area of compliance — a disconnect that midsized companies can ill afford in today’s tough economic climate.
The Level/Volume of Government Regulations is a Top Concern for Midsized Businesses
The midsized business owners and executives surveyed ranked the level/volume of government regulations as a top business concern, with more than half of the respondents indicating that they are very concerned or extremely concerned about this issue. Tax law compliance is also an area of concern, especially among the larger companies surveyed (those with 151-999 employees). These compliance-related concerns are not particularly surprising given that the midsized businesses surveyed have an average of five locations, in 2.1 states and 4.5 tax jurisdictions, which significantly compounds regulatory challenges.
Midsized Business Leaders May Be Overconfident About Compliance
The survey results indicate a lack of alignment between the perceptions and experience of midsized business owners and executives in the area of compliance. The vast majority of respondents (80%) express confidence in their organization’s compliance with tax laws and other government regulations. But the companies’ actual experiences tell a different story. A full one-third of the survey respondents report having been fined or penalized in the past 12 months due to non-compliance. Of those that were fined or penalized, each received an average of 6.4 fines or penalties. The survey also reveals that organizations that process payroll in-house received nearly three times as many fines or penalties as those that outsource their payroll function.
Midsized Business Leaders May Need to Pay Closer Attention to Compliance
The lack of alignment between perceptions and experience around compliance should give midsized business leaders pause. While the vast majority expressed confidence in their organization’s compliance with tax laws and other government regulations, one-third of respondents had experienced unintended expenses in the last 12 months related to non-compliance. Given that the level/volume of government regulations is one of their top three ranked concerns, these midsized business owners and executives must remain vigilant in the area of compliance, especially as regulations change and multiply.
*A complete list of sources and citations can be found in the full report.
About This Report: This report is based on findings from the ADP Business Owner Study, an online survey of 507 business owners, C-suite executives, and senior level executives in U.S. midsized companies conducted in May 2012 by the ADP Research Institute℠, a specialized group within ADP. This report reveals midsized business leaders’ perceptions about the economy, their top business concerns, and their anticipated responses to these challenges.