Paychex is a payroll, human resource, and benefits outsourcing service that focuses on small and mid sized businesses. In addition to these services, the company also releases analysis of small business issues including hiring, confidence, and legislation. Paychex recently released its list of the Top 10 Regulatory Issues for Small Businesses in 2018 covering what it believes to be the most pressing concerns for businesses for the year. The list gives an overview of a few major topics including tax reform and health care, but it also covers not so well known issues as well. For this article I want to dive into a few of these issues and give my take on things as well.
- Tax Reform: The biggest change to hit small businesses in 2017 was the new tax bill that will decrease the corporate tax rate to 21% and, for some businesses, will include the “deduction of business income for pass-through entities of up to 20 percent”. The specifics of the tax law are still being figured out, but its affects will hit businesses from a federal and state level. Some states currently “conform to the Internal Revenue Code (IRC) to some extent: some adhere to the entire code, others conform with exceptions, and some follow the code on a specific date.” Where each state stands will greatly affect small business taxes depending on location.
- Affordable Care Act: The big change is the elimination of the individual mandate “penalty by reducing it to $0 by 2019.” While this does not change the requirement to report, it does change it from a financial perspective.
- Employee Verification: If you hire immigrants, this is a big change. The Trump administration is serious about eliminating illegal immigration and as such “Immigration and Customs Enforcement plans to quadruple the number of Form I-9 on-site inspections in 2018.” For those unaware, the Form I-9 meets “the federal requirement to confirm an employee’s identity and eligibility to work in the U.S.”
- Payment evolution: Apparently payments will be required to be sent faster through banks as “starting in March 2018, financial institutions will be required to meet a strict 5 p.m. local deadline for same-day ACH funds availability.” This is key for businesses with employees who receive tips, allowing for faster payment times.