Donald J. Trump was inaugurated as the 45th President of the United States on Friday, January 20. Trump’s administration is making many changes. As a small business owner, one of the biggest things on your mind is how Donald Trump’s policies will affect you. While many of his proposals will likely be revised before being passed by Congress, with Republican majority leaders in both the House of Representatives and the Senate, many of his policies will likely become law.
Here are five ways that Trump’s policy could affect your small business.
With tax season upon us, you’re likely thinking about how your tax filings might change over the next four years. You might be interested to know what Donald Trump has proposed. Trump has called for a reduction of the corporate tax rate to fifteen percent, a maximum rate of fifteen percent for S-Corps and related pass-through entities (including LLCs), and a range of fifteen to thirty-five percent for the current corporate tax rates.
In addition, if you have cash overseas, you’ll be allowed to repatriate the earnings for a one-time ten percent tax. However, Trump does plan to close a loophole that allows corporations to defer taxes by banking overseas. Changing the tax code may be difficult for President Trump and his supporters, however, because Congress has a notoriously difficult time agreeing on tax reform.
One of Republican party’s biggest campaign promises was to repeal the Affordable Care Act. On January 12 the Senate voted 51 to 48 to repeal the ACA, but a replacement system has yet to be proposed or put into place. However, Republicans have stated that a new healthcare system will be put into place and will let states deal with healthcare sales, which may allow insurance companies to sell across state lines. Trump also supports making monthly premiums tax deductible. If you provide health insurance to your employees, new healthcare regulations may change your employees’ coverage, as many small businesses have received coverage under the ACA that they may not have received otherwise.
Trump plans to revise all government regulations that affect American-owned businesses. Many small business owners consider government regulations a serious problem that affects their companies and profit margins, but until Trump proposes his changes, it’s unclear how significantly regulations will change.
Trump has often stated that he supports keeping manufacturing inside the United States to increase job growth. In addition, Trump campaigned on renegotiating the North American Free Trade Agreement (NAFTA). He plans to impose new tariffs on outsourced manufacturers in China and Mexico and also plans to back out of the Trans-Pacific partnership.
Many small business owners are nervous about these new trade laws, as using overseas partners often allow businesses to reduce overhead expenses. If you outsource manufacturing of your company’s products, you may have to pay higher fees to continue with your current manufacturers, or look for an American manufacturer.
Higher minimum wages in several states, including Arizona, Colorado, Maine, and Washington, went into effect on January 1. While raising the minimum wage is traditionally favored by Democrats, experts expect this trend to continue during Trump’s presidency. Some small business owners have opposed raising minimum wage in the past, saying it increases overhead costs and prevents them from hiring employees. Others, on the other hand, say it helps the economy by giving consumers more expendable income.
While the Federal Minimum Wage is unlikely to become as high as the $15 minimum in California and New York, Congress will likely be pressured to increase the current minimum wage, which has been $7.25 since 2009.
Even with the many sweeping changes on the horizon, Trump’s changes to the U.S. Tax Code will not go into effect until after this tax season, so you’ll have some time to prepare and adjust your company’s withholdings. In the meantime, here are 12 tools you can use today to make the 2017 tax season a breeze.