When most people think of America, one of the first things they think of is capitalism. After all, Adam Smith, one of the founding fathers, was also one of the pioneers of Classic Liberalism, a philosophy centered around free trade business.
However, although the USA is a fantastic place to open a business, there are a few obstacles that were not there when Smith was alive.
America was founded upon the principle that taxes should be kept to a minimum. Today, however, there are bucket loads of taxes: income tax, capital gains tax, corporate tax, inheritance tax, luxury tax, etc.
The tax that affects business owners the most is probably employment tax – a tax put in place to ensure that everyone who works for you will receive Social Security and Medicare.
And there are certain taxes (known as an excise tax) which affect certain items. Examples include environmental taxes, fuel taxes, and wagering taxes.
Overcoming regulations that could challenge your business
One of the most controversial (non-tax based) regulations is the minimum wage. Some argue that it’s too low and it results in people who work full-time living in poverty. Others say that raising the minimum wage will cause people to lose their jobs as most business’ profit margins will not be high enough to be able to pay all of their employees minimum wage.
The challenge for employers is hiring enough people for your company to be able to run well and make a good profit, but not hiring so many people that you cannot afford to pay all of them.
The third challenge is not actually from the government but is a result of capitalism: competition.
People like to spend, but they also want to save. Being a regular business that has relatively reasonable prices won’t do. You have to stand out from the competition. You can either do this by offering fantastically low prices or selling unique products that you can’t find elsewhere.
For example, if you want to sell stationary, perhaps try offering an office delivery service. Or if you run a burger joint, try selling burgers based on a unique home recipe.
Health and safety
The final challenge we will cover here is safety regulations. Although they are essential, they can sometimes be somewhat frustrating.
For example, to operate a forklift, you have to have a valid forklift operating licence. Therefore, you will either have to provide this or only hire people who already have it.
A safety inspector can visit any American company at any time, so it’s important to make sure that you eliminate trip hazards, label fire exits, and keep sharp objects safe. Although individually each safety regulation is easy to follow, collectively, they can be quite a challenge.
If you’ve got an entrepreneurial spirit, then America is a great place to be. Compared to some other countries, starting your own business is rather easy. However, it still requires a lot of hard work, imagination, and determination.
Make a business plan before starting your business. Read why this is so important.