4 Examples of Administrative Burden

John Spacey, updated on December 03, 2017

Administrative burden is work that is required by laws and regulations that don't contribute to the output of a business. From the perspective of the business, administrative burdens can be a distraction, cost, delay and source of uncertainty, risk and stress. Administrative burdens may be necessary to fair taxation, health, safety, environmental stewardship and other efforts to improve the quality of life of a nation. However, they can be unnecessarily complex, inaccessible, opaque and rigid. This can put small businesses at a disadvantage as they may lack resources and specialized skills to deal with government regulations. Administrative burdens also impact large businesses by introducing delays, costs and uncertainty into operations and projects. The following are illustrative examples of administrative burden.

Registration, Licenses, Permits

Permissions to operate such as a business license or building permit. Many nations have made progress in reducing these burdens. For example, the ability to register a corporation in an inexpensive online process that takes minutes.

Taxes

Overly complex tax rules, extended obligations and the requirements for small businesses to prepare books according to accounting standards intended for large firms. Some governments offer a simplified set of rules for small businesses such as the ability to immediately expense small capital purchases.

Trade

Paperwork, fees and delays related to importing and exporting. In some cases, administrative requirements remain extensive when countries have free trade agreements. Governments may have little incentive to reduce administrative burden for foreign firms. As such, administrative burden is a consideration in the negotiation of trade agreements.

Compliance

Record keeping, reports, inspections and applications for exemptions related to laws and regulations.

Notes

Administrative burdens are a drag on the competitiveness of a nation. However, the policies that they implement can improve quality of life by reducing risks and creating a fair and stable society. In many cases, administrative burdens can be greatly reduced with creative approaches such as exemptions for small business and rule simplification.