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The Honolulu Advertiser
Posted on: Wednesday, December 24, 2003

Owners face paperwork deluge

By Sean Hao
Advertiser Staff Writer

Kane'ohe business owner Steve Young figures he spends about half his time filling out paperwork, a task that takes time away from running his three local businesses.

Steve Young runs three businesses out of his home with the help of his mother, Torsie. Young says he spends about half his time on paperwork — a burden shared by many small-business owners across the nation.

Deborah Booker • The Honolulu Advertiser

Just how much the paperwork and record-keeping costs is difficult to assess, said Young. But a recently released survey by the National Federation of Independent Business found small-business owners pay an estimated $48.72 an hour for paperwork.

For tax-related record-keeping, the figure climbs to $74.24 an hour, according to the federation survey of 750 employers.

To cope with all that red tape, small-business owners often elect to do paperwork in-house without pay or use computers to lighten the record-keeping burden. Other options include outsourcing the duties, such as accounting or payroll.

Still, dealing with paperwork, much of it from state and federal governments, is a burden especially felt by small businesses that can least afford to dedicate time to filling out paperwork.

"It's three times the headache, especially around tax time," said Young. A principal in TV and film production company Canoe Girl Productions, he also runs a travel agency and a wedding planning business. "We're basically up late at night doing paperwork," he said.

Small-business owners most often deal with paperwork related to licenses and permits, according to the survey, followed by purchases and customers.

The most commonly cited paperwork problem was unclear or confusing instructions followed by the volume of paperwork, duplicate information requests and the required maintenance of records that normally would not be kept.

For businesses that import products, handle food or sell to the military, the paperwork requirements have only increased, particularly in the wake of the Sept. 11 terrorist attacks.

"If anything there's a lot more paperwork" that's required of businesses, said Mike Irish, president of Diamond Head Seafood Co., kim chee maker Halm's Enterprises and Keoki's brand laulau.

Irish said these businesses face scrutiny from a multitude of government agencies, including the U.S. Department of Agriculture, the U.S. Food and Drug Administration and the state Department of Agriculture. Often, these agencies ask for the same information.

To handle the workload, Irish's three businesses employ five people who deal strictly with paperwork requirements.

"Everybody wants information from small businesses and that's what makes it difficult," Irish said. "If we get caught up in too much paperwork, we can't take care of our small business.

"But I can appreciate what the government is trying to do and I do see some of the benefits for the general public" such as food safety, he said.

At the same time, business owners said the government is getting better at using the Internet to provide information such as forms and instructions, and in allowing electronic filing of forms.

Recently, the state's Department of Commerce and Consumer Affairs cut online business registration fees while increasing the number of occupational licenses that can be renewed online.

In September, the department also plans to launch an online service that will allow new businesses to simultaneously register with state Department of Commerce and Consumer Affairs, Department of Taxation and Department of Labor and Industrial Relations, and the U.S. Internal Revenue Service.

Eventually, the state wants to allow businesses to apply online for various city business permits. Some applications are already on the Web, including those for building permits and motor-vehicle registration renewals.

The move to encourage online filing is part of an effort to lower the cost of manually processing forms, but it's also a means of improving the state's business climate and image.

"We want to make it easier for all new businesses and eventually existing businesses to do business in the state," said Ryan Ushijima, the state's commissioner of securities. "That's probably the most important objective."

Allowing small businesses to file forms online helps, but doesn't completely eliminate the paperwork problem.

"You still have to input the information and digest the information," Irish said. "The amount of work doesn't change. We just don't have to mail out as many reports."

Reach Sean Hao at shao@honoluluadvertiser.com or 525-8093.