When you run a small business, be it a humble hamburger shack on a street corner, or a freelance writer LLC, political economic policies are bound to affect your bottom line one way or another. You can attempt to navigate these sometimes convoluted and turbulent waters on your own, or you can seek out the expertise of policy research firms who make it their business to know precisely how the current political climate will affect not only how you do business, but new rules and regulations for employees, taxes, health insurance, and much more.
The Hill has reported extensively on the new Biden administration that is about to take office in the United States. They’ve also identified some important things a small business owner should expect after Inauguration Day, January 20, 2021.
Health Care Costs for Small Businesses Will Remain Steady
Under the Trump Administration, health care costs rose between 6 and 8 percent, or so claims The Hill. This is four times the rate of inflation. While Biden is a big supporter of the Affordable Care Act, he is also in favor of health insurance for all who can’t afford to pay for it. So what’s this mean for small business? Biden’s approach to health care means many of Trump’s programs like the association health plans and the easing of health care reimbursement accounts will be gone. More than likely, the Biden Presidency will be reinstating ObamaCare rules, including the individual mandate which means small business owners (even if you’re a one-person shop) will have to pay a monthly premium for health insurance. That said, Biden’s health care initiatives are said to avoid fluctuations in small business health care costs and potentially make things more affordable for both business owner and employees.
Taxes May Likely Increase for Small Business
The spending plans for environmental initiatives and national infrastructure under the Biden administration are massive. Someone has got to pay for these plans and that not only includes big, wealthy businesses but small businesses too. Although a staunch opponent of Trump’s 2017 tax reform package, Biden is said to want to stay away from levying too much tax on small business since bottom lines are usually tight. However, increasing the corporate tax from 21 percent to 28 percent while at the same time, increasing capital gains taxes for wealthy individuals is a sure thing.
How will these changes affect your small business? If you normally file an annual C-Corporation tax return, it’s likely your tax rates are going to increase. For certain, if you are already in the highest earning tax bracket, you are going to be paying more. Also, if you plan on selling your business, both you and the buyer will be paying more taxes during the transaction than you would under a Trump administration.
Small Businesses Will Pay More for Employees
Currently, small businesses are hard pressed to find good workers in this low unemployment, Covid-19 ravaged climate. It’s also a challenge to compensate good workers fairly since there is increased competition from larger, more cash fluid firms. The bad news is that under the Biden administration, things can get more costly for a small business since he supports a $15 minimum wage.
On top of that, he is supporting mandated paid sick/maternity leave, more power for unions, and also the elimination of the non-compete clause for workers. How will this affect your small business? New labor and employments regulations might have a substantial negative impact on your operation in form of higher wages and time off with full pay. If you’re concerned about these new laws and regulations, you might want to consult with a policy research firm for specific laws that will affect your bottom line going forward.
Spending on Defense and Infrastructure Could Help Small Business
The good news in all of this is that small businesses may actually benefit from a Biden Administration that wishes to spend more on national defense and infrastructure. An ardent supporter of the military, Biden is a big advocate for increased funding for military projects and also, investing in the hundreds of billions for new transportation and updated utility structuring.
Should the new President’s initiatives for military and infrastructure be congressionally approved, small businesses such as construction contractors and construction machinery outfits could reap the rewards with new, long term contracts.
Navigating the sea of new business rules and regulations that normally come with a brand new Presidency can be confusing and anxiety provoking for small business owners. If you feel you can’t get a precise handle on all the changes occurring with health care, taxes, and employee benefits, consulting with a policy research firm could not only save you money, but it will put your mind at ease.