Small businesses lose over 250 hours a year to red tape: CFIB report
According to the report, the time spent on red tape specifically has increased by 35 per cent since 2020, from 189 hours in 2020 to 256 in 2024.
January 27, 2025 | By MRO Magazine
A majority of Canadian small business owners said that excessive government regulations significantly reduce their business’s productivity and ability to grow, in a recent report by the Canadian Federation of Independent Business (CFIB). [Photo: Nittaya/Adobe Stock] In 2024, small businesses spent 735 hours complying with regulation, finds a new report by the Canadian Federation of Independent Business (CFIB) released on Jan. 27 in partnership with Intuit QuickBooks as part of the Red Tape Awareness Week. Over a third of that (256 hours or about 32 business days) is spent on red tape that could be eliminated without compromising public health and safety.
According to the report, the time spent on red tape specifically has increased by 35 per cent since 2020, from 189 hours in 2020 to 256 in 2024.
“Business owners lose an entire month’s worth of productivity to filling out lengthy or redundant forms, navigating mazes of government websites, and deciphering government jargon. That is crucial time that could be better spent on activities like training staff, planning business expansions, serving customers or even spending time with family,” said Marvin Cruz, CFIB director of research. “As governments at all levels look for solutions to Canada’s productivity problem, eliminating regulatory barriers and giving small business owners their time back needs to be a top priority.”
In addition to lost time, regulatory compliance was costly, CFIB said.
In 2024, Canadian businesses faced compliance costs totaling approximately $51.5 billion, a significant increase of 13.5 per cent or $5 billion from CFIB’s 2020 estimate ($45.4 billion). Business owners attribute a substantial portion—35 per cent, or $17.9 billion—of these costs to red tape, up from $12.7 billion in 2020. Higher wages and professional fees, along with an increase in time spent on compliance, are driving the rise in costs.
The report indicated that small businesses also face a higher regulatory burden than their larger counterparts, paying over five times more per employee. In 2024, businesses with fewer than five employees spent $10,208 per employee on regulatory compliance, while businesses with 100 or more employees spent $1,374. Smaller firms also spent 198 hours per employee on compliance, compared to just eight hours for those with over 100 employees.
In the report, business owners indicated that savings from regulatory reductions could be used to expand operations, hire more employees, increase wages, and improve work-life balance, all of which could contribute to greater productivity and economic growth.
“Small business owners don’t get into business to be government compliance experts. Red tape discourages entrepreneurship, stagnates economic growth and overall, is a lose-lose situation for businesses and consumers alike. Eliminating unnecessary regulatory compliance would free up over 200 million hours across the economy for more productive activities,” said Laure-Anna Bomal, CFIB economist and report co-author. “Imagine what an entrepreneur could do if they got just over a month back. If Canada wants to improve its productivity and economic competitiveness, it must put a renewed focus on cutting red tape.”
A majority (87 per cent) of small business owners said that excessive government regulations significantly reduce their business’s productivity and ability to grow.
Read the full report: Canada’s Red Tape Report: The Cost of Regulation to Small Business.
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