Since 1963, the Small Business Association has sponsored Small Business Week, a time to celebrate the many hard-working entrepreneurs in America. Today’s small business owners face increasing challenges of starting a company under a complex tax and regulatory environment. They must also leverage technology in order to compete with larger peers and stay informed of frequent legislative changes affecting small business accounting in order to succeed. To help keep small business owners up to date, here are four legislative pieces affecting accounting to watch in 2015.
Wages and Overtime Eligibility
According to the Economic Policy Institute, U.S. workers’ productivity rose 64.9 percent between 1979 and 2013, yet hourly wages only increased an average of 6.1 percent during the same time period. To ensure adequate pay for work performed, the U.S. Department of Labor has been charged with modernizing and streamlining existing overtime regulations, which may change the way workers are classified and redefine who is eligible for overtime pay under the federal Fair Labor Standards Act. A main focus of this directive is lower paid managers who are not eligible for overtime, yet work much more than 40 hours per week. If employees’ overtime eligibility changes, small businesses may need to realign job responsibilities or hire additional staff as needed. Payroll accounting changes may also need to be implemented as a result of any changes.
Affordable Care Act
The sweeping health care reform brought on by the passing of the Affordable Care Act will continue to impact small businesses this year. Depending on the number and type of employees at a company, health care insurance that is adequate and affordable may need to be offered by an employer in order to avoid a potential penalty. The IRS is also offering a small business tax credit for qualifying companies providing health care coverage to employees. To determine an individual company’s responsibility in regards to this small business legislation, the SBA is currently running informational webinars.
Taxation of Online Sales
As the popularity of online shopping continues to grow, Congress is wrestling with the best way to ensure the proper collection of state sales tax. The Marketplace Fairness Act of 2015 is the latest attempt at developing a standard rule. This proposed legislation would require companies with over $1 million in remote online sales (meaning sales outside of the state where the company has a physical presence) to collect sales tax at the time of sale. The added bookkeeping effort of collecting multiple states’ sales tax related to this proposed ruling is a concern for companies with smaller accounting staffs.
Sec 179 Depreciation
Section 179 Depreciation allows companies to deduct the full cost of an equipment or software purchase the year it is placed into service, rather than requiring depreciation of the item’s cost over a longer time period. The Section 179 rules are tweaked each year and should be reviewed when preparing taxes. Currently, the 2015 rules state that the deduction limit is $25,000 and the cap on equipment purchases is $200,000, but these rules can change before tax filing deadlines. If beneficial changes are made prior to the end of the year, companies may want to consider additional investments in technology assets or equipment that qualify under this rule.
By researching new small business legislation, business owners can find relevant tax credits and improve their competitive position in the marketplace. Small Business Week is a great time to network with other entrepreneurs and those who support small companies.