There are hundreds upon hundreds of regulations in place and compliance with each is crucial to your company’s success. That means keeping appraised of the top rules, which are often changing, to maintain an advantage over your competition. If you fail to comply, you’ll only face serious penalties and even legal troubles (both of which can drag you down).
The following six federal policies are changing or are highly likely to change, meaning they can affect your small business. Therefore, it’s essential to keep appraised on the developments so you can save yourself some time, money, and unnecessary stress.
We look at seven huge regulatory changes that can dramatically affect your business so that you’re prepared for what’s coming, or has passed to ensure you’re on track.
1. Tariffs and Trade Policy
A lot of business owners have their eyes on the current happenings of the international trade policy. President Donald Trump has enacted many tariffs on trading partners, such as Canada, European Union member states, and China.
Tariffs carry many shock ways on worldwide economics and it’s especially felt in industries that haven’t been targeted before. It is vital that business owners understand how the tariffs and trade policy will impact them in the long run and need to make adjustments accordingly. Cutting down on business costs, watching profit margins, managing inventory levels, keeping extra liquid capital, and renegotiating contracts can help protect you against the rising tariffs.
2. Paid Sick Leave and Minimum Wage at Local and State Levels
All throughout municipalities and statehouses, attempts at raising the minimum wage and mandating paid sick leave have become very popular. Most localities and states will agree to paid leave policies. In fact, paid leave bills were introduced in Congress, and most entrepreneurs are offering paid leave benefits as an amazing incentive for new hires, however mandatory paid leave policies will probably require additional thought in planning and budgeting.
“No matter how large or small the organization, most employers want to create a workplace culture that supports employees in times of need. However, for small businesses, mandatory paid leave may present challenges. Whether it’s having a key member of a small team out of the office for an extended period of time or the back-end administration of such a program, mandatory paid leave will introduce new dynamics small business owners will have to navigate,” says Martin Mucci, president and CEO of Paychex, about the new paid sick leave and minimum wage laws.
Find out your state’s paid sick leave laws here.
In fact, at the start of 2021, many states upped their minimum wage numbers on January 1, 2021 while others have a mid-year or September start date. If you’re not sure where your state falls, find if your state is on the list here.
3. Sales Tax
The 2018 decision of the Supreme Court regarding South Dakota v. Wayfair signaled the end of e-commerce businesses relishing in zero sales tax. South Dakota argued an earlier decision which stated that businesses can only be taxed if they have a physical presence in a state, they cited an estimated $48 to $58 million in lost tax revenue every year. Additionally, the U.S. Government Accountability Office estimated that all 50 states collectively lose billions of dollars in tax revenue as well.
“[W]hile we don’t know the specific rules, we do know this will complicate things. Online retailers, or even service providers, will now have to analyze what are likely to be 50 state laws dealing with sales tax for out-of-state businesses. There is already tremendous variety with varying rates, some states not charging sales tax for services, [and] some only charging on certain services, and there could be a variety of different thresholds tested by various states to determine the limits.” – Swyft Filings
For many brick-and-mortar locations, this Supreme Court ruling signifies a long-sought victory in its competition with online retailers. A lot of e-commerce businesses have already voluntarily collected sales taxes in anticipation of this change.
4. Federal Tax Policy
Federal tax policy reform carries major implications for all business sizes. The law totally revamps the United States tax code and so many states are likely to change their regulations in order to better conform with federal policy.
“The Tax Cut & Jobs Act passed in 2017, but we have a long way to go before we can identify all the effects it will have on the small business owner. In 2018, all eyes are focused on the impact of the act, with financial consultants and accountants pouring through the complex details … With time to digest this mammoth new law, there will likely be opportunities uncovered by the assiduous consultant to the benefit of clients, particularly the small business owner demographic.” – Jen Gibbs Swets, partner of DWC – The 401(k) Experts
Until implementation of the reform is well underway, we still don’t know the full effects but many entrepreneurs are monitoring development and are consulting with professionals.
5. General Data Protection Regulations in the European Union
The General Data Protection Regulations (GDPR) may be happening across the pond but the implementation is a kind of bellwether for the United States – this can also be followed by similar regulations in an attempt to tighten up American networks and increase data security.
“While GDPR is EU-focused, we expect this global change to result in stricter data policies in the U.S.,” McGowan said. “With breaches like Equifax occurring more frequently, small businesses should focus on improving security protocols this year to protect consumer data, like email addresses, passwords and other personally identifiable data. While the terms of how the U.S. will respond to GDPR are not yet clear, business owners should ensure this policy is on their radar and take steps now to keep ahead of these regulations.” – E.J. McGowan, vice president and managing director of Campaigner
6. Affordable Care Act
Granted there have been numerous failed attempts at health care efforts in Congress but changes to the Affordable Care Act (ACA) are still viable. In the newly proposed tax policy change, there is a provision included which reduces the ACA’s individual mandate penalty to $0, thereby effectively repealing the provision through tax policy instead of congressional action.
“While it’s true that the individual mandate is gone, the mandate that requires business owners to provide their full-time employees with insurance has not gone away. Businesses that have not offered their employees sufficient coverage face penalties.” – Nate Masterson, marketing manager for Maple Holistics
However, Paychex reports that provisions will not change and that employers and other self-insured individuals need to prepare to comply with the existing requirements.
7. The American Rescue Plan Act of 2021
With a global pandemic in 2020 – that is still affecting the global economy in 2021 – the U.S. government had to take action to support small businesses and employees. With the American Rescue Plan Act of 2021 (ARPA), trillions were provided in relief to support employers and their employees.
The ARPA includes tax credits, PPP loans, and unemployment benefits, to start with. As laws and regulations evolve then you must ensure you are following what new laws may be coming your way. Refer to the Department of Labor site for the most up-to-date information.
Keep An Eye On Regulatory Changes and Development in 2021
Continue to read up on regulatory developments so you can maintain a competitive edge and your business doesn’t suffer any negative fallout. Especially with a new administration, regulatory changes are common and small businesses are often one of the first to be directly affected.
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