The Impact of Recent Legislative Changes on Small Businesses

Several major changes of the legislation have occurred in the recent years influencing small businesses in various spheres. From changes in taxes to employment and data privacy laws, small business owners have had their work cut out for them in terms of the law. We will discuss some of the recent changes in legislation and their implication to small business operations and profitability.

Defining Small Businesses 

According to the US Small Business Administration, a small business is a single operation having less than 500 people in its workforce. Small businesses accurately account for 99.9% of all companies and provide work to nearly 50% of all private employees in the country. 

They are major agents of change, growth and employment opportunities. However, due to the limited funds available to smaller businesses, they may struggle to keep abreast and adhere with appliances and changes in laws.

Major Legal Reforms of the Recent Period

Some of the most influential legislative changes for small companies in recent years include:

Tax Cuts and Jobs Act 

The tax reforms to the corporate tax code were legislated in 2017 under the Tax Cuts and Jobs Act. 

Key changes included:

Slash the corporate tax rate from 35 percent to 21 percent

Reducing tax on qualified business income of pass-through entities to 20

Restricting some of corporate deductions 

However, it was identified that tax compliance was mostly advantageous while becoming more complicated for small firms.

Affordable Care Act: Employer Mandate

The employer mandate provision of the ACA means that firms with fifty or more employees, including full-time equivalent workers, must offer affordable health insurance or pay the penalty. This threshold drop from 100 employees was expected to increase compliance burdens for mid-sized firms.

Overtime Pay Expansion 

Effective December 1, 2016, The Department of Labor increased the salary basis test for the highly compensated employees from $ 23,660 to $ 47,476. This increased the facial borne payroll costs and record keeping requirements for affected small employers.

General Data protection Regulation and Data protection Regulations

Companies with less than 250 employees, who processed personal data relating to EU citizens will be required to adhere to GDPR regulations concerning data protection measures and consumer privileges with hefty penalties as a consequence. Accounting of additional costs is due to monitoring and safeguarding systems.

Paid Sick Leave Laws

More and more state, city or country governments have enacted laws which mandate private sector employers to grant paid sick days to their employees. Supervising of the accrual systems, the eligibility, and documentation come with more tasks to perform. These are only a few of the legal changes that small firms have to factor in when attempting to limit expenses and optimize productivity.

Key Problems & Costs for Small Business Owners

Complying with new legislation brings an array of hurdles for small companies:

Tracking Regulatory Changes

As you can imagine with small budgets keeping up with these various changes legal across the federal, state, and local level can still be a challenge. However, lack of information leads to non compliance.

Managing, performing, responding and delivering to meet requirements

In the following few parlances, it has noted that complex laws need professional assistance in terms of interpretation and implementation. But legal and consultant fees are not cheap and they grow very fast.

Adapting Operations & Systems

Improving systems, collecting new key performance indicators, rewording policies and contracts and training the employees takes time and cost.

Covering for Higher Labour Expenses 

Measures such as healthcare mandates and overtime expansions automatically increase payroll costs in organizations particularly inCash strapped small firms.

Adjusting Prices or Staff

Some companies are compelled to increase their prices or downsize their personnel or operating hours. It risks both sales revenues and employees morale. Overall, this causes a constantly changing environment and since the legal aspects happen in a dynamic path, it becomes increasingly difficult to manage the small business budget and time efficiently and workforce.

Enormous Ways That Small Companies Should Embrace

While daunting, small enterprises can take proactive measures to ease legal compliance:

Get help wherever it is inexpensive as possible; such as legal clinics or Small Business Development Centers. 

Trade association and peer-supported groups to find out what works in kindred organizations.

Consult or pay for online compliance services.

Aim internal processes to systematically schedule a look at the need for changes.

Opt for easy to use software tools that with adoption can be used to enforce the new requirements.

Utilize the realistic tax credits, exemption or incentives present in the market.

Participate in the conversations that the local government has concerning new regulations.

The Bottom Line

Such changes, such as employment laws, tax codes, health care statutes and others that occur not rarely, superimpose yet more inconveniences and expenses on the owner of a small business already overloaded with work. Learning curve slippages also hurt in terms of penalties or loss of an opportunity cost. As part of a long-term strategy to reduce the time needed to address compliance issues, taking actions to alert, evaluate, and fold in changes disclosed legally through low cost mechanisms, cross- discipline work and process redesign may likewise contribute to the issue. Equally so can positive interaction with the regulatory decision makers.

FAQs

What can small businesses do in terms of operations in order to respond to new regulation?

Small businesses can adapt new laws to their employment policies and handbooks, introduce basic IT measures like using virus protection, safeguard customer data, and write regulations/disclosure/consent forms. Reducing and coordinating practicing time also plays an important role in avoiding additional administrative costs of people management.

What actions should traditional hardware suppliers involved in other forms of supporting several other SMBs adopt to cope with the latest legislative changes?

The basic services that the hardware suppliers must sell to owners of small scale businesses are value, durability and data security. Integrated privacy remote data backup, encryption and control functions can turn into extra privacy compliance selling points. Possible or assured lifespan also enable new startups to secure moderate initial investments through leasing or durability guarantees.

Where can the owners of small businesses turn for information on how various new laws affect them?

The US Small Business Administration has released resources and tips relating to employment, tax, data, and other activity-related issues resulting from new regulations. Dozens of legal blogs and consulting services religiously analyze complicated compliance matters for small company audiences and offer forms so they can address their newfound responsibilities super efficiently without a lawyer. State agencies, local small business bureaus are also important counselor sources. They also provide counseling services.