Navigating the Small Business Regulatory Landscape of 2018

By Pedro Hernandez | Posted January 14, 2018

The start of a new year is a great time to take stock of the regulatory landscape and how it affects small businesses.

In 2018, there are various legislative reforms and regulatory changes that will not only affect the bottom line, but also how small businesses operate. It's a smart move to at least get acquainted of the do's and don'ts — especially the don'ts — of running a company to stave off trouble with authorities, not to mention adjust workflows, business processes and investments to suit.

Human resources and payroll specialist Paychex has put together a list of the top 10 regulatory challenges faced by U.S. entrepreneurs, startups and established small companies this year.

Small Businesses and Tax Reform

Leading the pack is the sweeping federal tax overhaul passed by the U.S. Congress late last year. An in-depth analysis is available on the Paychex website, including the effects to individuals and businesses.

With many new provisions set to take effect in 2018, the main takeaway is that small business will need to quickly revamp their tax accounting and how they draw up employee pay checks.

"Employers will need to implement withholding changes once the Internal Revenue Service (IRS) releases updated tables. The IRS has indicated that the information in the withholding tables will be designed to work with the current W-4 for 2018," noted Paychex.

Some changes aren't permanent, so business owners may need to revisit the issue in several years. "The changes to the individual tax code will expire in 2026 without additional Congressional action," Paychex said.

Small business owners are advised to carefully consider how their companies are structured and the effects of the new tax legislation on deductions.

"Additionally, pass-through entities, which account for most businesses in the U.S., generally utilize the individual tax code and are therefore directly impacted by these changes to the code," continued Paychex. "To further reduce the tax burden for these entities, Congress added a deduction of business income for pass-through entities of up to 20 percent, but there are complex requirements and guardrails for the application of this deduction."

Small businesses should also keep an eye on what actions their local state governments take in the wake of the federal tax overhaul, including possible new laws.

ACA, Paid Leave and I-9 Scrutiny

Another change brought by tax reform is the elimination of the Affordable Care Act (ACA) individual mandate penalty, or rather reducing it $0 by 2019. The filing requirement still stands, however, along with other obligations.

"Additionally, other provisions in the ACA, including the employer shared responsibility provision, remain unchanged. Employers should do their due diligence preparing for current year ACA filing obligations and gathering 2018 tax year data for next year's filing," cautioned Paychex.

Other regulatory issues include paid leave laws, including possible congressional action that may end up preempting existing state and local laws. Minor changes were made to the Employment Eligibility Verification form (I-9) in 2017, and Immigration and Customs Enforcement officials said they plan to quadruple the number of on-site I-9 inspections in 2018.

Other regulatory issues to watch in 2018 include pay equity, data privacy, state- and municipal-level retirement plans and faster, gig economy-friendly payment options including Same Day ACH (Automated Clearing House).

Get caught up on Paychex's 10 Top Regulatory Issues for Small Businesses in 2018 here.


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