As with any incoming administration, changes in our government’s policies can affect your small business. The Trump administration is no different. While small businesses are more affected by state and local law changes, shifts in our federal laws can also make an impact.
Here’s the good and the bad that you can expect from our new president:
Simplification of the tax code
Our tax code currently has seven brackets with corporations paying up to 35% in taxes. President Trump has vowed to simplify the whole mess and reduce corporate tax to 15% for most business structures.
The good: This simplification could mean less taxes for a lot of small businesses, plus less hassle at tax time.
The bad: Many have said that a tax cut of this size could increase our national deficit, putting us further in debt.
Recommendation: Based on the current speed this administration is moving, changes to the tax code will happen quickly. It’s a good idea to work with a trusted advisor who can quickly tell you how this will affect your business, and how to make the most of any changes.
According to the National Federation of Independent Business, 45% of business owners count regulations as one of their most serious problems. Trump has signed an executive order to effectively cut any new regulations. He’s also promised to roll back some of the current regulation to make it easier for businesses to operate.
The good: For all those businesses suffering from too many regulations, this could be the exact solution they’re after. It’s reported that the average small business owner spends $12,000 a year dealing with regulations, that’s quite a hefty savings.
The bad: Many of the regulations Trump is focusing on are environmental, and come from the EPA and things like the Paris agreement (which limits the amount of greenhouse gases worldwide). This could make a difference for manufacturing businesses, however not a lot of other small businesses currently run afoul of the EPA.
Recommendation: If you’re saving a significant amount on regulations this year, it’s key that you know how to put that money to work in your business. You’ll also want to keep an eye on the regulations that directly affect you. If they change you’ll want to take advantage immediately.
Banks and lending
Trump has repeatedly criticized the Dodd-Frank Act saying it keeps bankers from being able to loan money to businesses. A change or removal to this act could be in our future.
The good: Getting a small business loan could be easier than ever as banks would be free to loan money to less established businesses.
The bad: The Dodd-Frank Act was put into place after the banking crisis in 2008. Removing some of that regulation could lead to a rise in predatory lending practices.
Recommendation: When applying for a bank loan, make sure you understand your loan conditions. Be clear on what can cause your interest rate to rise, and what you will do if that happens. Think about the worst case scenario, like if your business fails, do the terms of this loan still make sense? Will you be able to pay it back? Once you understand the risks you can sign on the dotted line.
The Affordable Care Act has been a target of Trump since his campaign days, and his executive order affirmed that he plans on reducing or removing it. Employers with 50 or more full time employees are currently required by law to offer health insurance to their employees. A change to the ACA could impact a large number of businesses.
The good: The changes to the ACA could reduce the cost of health insurance for your employees. If you’ve been hesitant to expand due to these costs, this could be your year to take the leap.
The bad: Trump has been unclear on what will replace the ACA. He’s said he wants to leave it up to the states, but the exact plan has yet to be decided.
Recommendation: This is a great time to contact your state officials and weigh in on how health insurance costs affect your business. Having control given to the states could make it easier for your voice to be heard as plans are put in place.
To make the most of all these changes, you’re not only going to need to know when they happen and how they affect you, you’re also going to need to act quickly. Get in touch with us today for a free consultation to get prepared to take advantage of any upcoming changes that could affect your business.