Tax day has come and gone, but that doesn’t mean SMBs are in the clear for another 12 months. As the owner of a small business, you are responsible for making estimated tax payments throughout the year, and failing to pay the IRS what you owe can result in serious penalties. To avoid losing their hard-earned money, owners need to stay up to date on all the latest laws and codes. Here are some new tax laws that could affect your business in 2016:
The PATH Act
Also known as PATH, the Protecting Americans from Tax Hikes act was passed in December of last year and impacts both individual tax payers and the owners of SMBs. Business owners should know that they can now deduct funds used to make improvements to their shops as well up to $500,000 in property purchases, provided that these spaces are used for business at least 50 percent of the time. It’s important to note that commercial property purchases may not exceed $2 million in a single tax year. Finally, owners can score additional tax savings by hiring veterans and employing Americans who are receiving food stamps.
Online Sale Taxes
Laws regarding online sales tax collection are likely to change in the coming months. Known as the Marketplace Fairness Act, this bill would empower states to require their online merchants to collect and pay state sales tax the way brick-and-mortar shops do, provided that the businesses earn $1 million or more in a year. The goal of the law, which is still working its way through Congress, is to create a more level selling field between online and physical retailers.
Increasing the Number of Workers Eligible for Overtime
Under the Department of Labor proposed new rule, an employee working for more than 40 hours a week will be eligible for overtime pay if they earn up to $970 a week ($50,440 per year), up from $455 per week ($23,660 per year) under the current rule.
Limits on Retirement Option Small Businesses Can Offer Employees
Last Fall, the Department of Labor proposed a new retirement rule that would limit the types of retirement plans offered to small businesses. It would also restrict the advice financial experts can share with small business owners and employees.
Rising ACA Penalties
By now, most Americans are familiar with the ACA, or Affordable Care Act. Also known as Obamacare, the law requires every American to purchase health insurance or pay a penalty. As of 2016, fees for failing to buy insurance rose to a hefty $695 per adult. Because many small business owners purchase their own healthcare, it’s important that they stay cognizant of these rules.
Additionally, business owners need to be aware of the laws affecting health insurance for their employees. Currently, larger employers who have 50 or more laborers are required to provide affordable healthcare benefits, or face tax penalties. Note that you might be exempt from this ruling if you employed this staff for 120 days or fewer. As a result, companies with a large number of seasonal workers will likely not have to provide health coverage. We recommend you to watch out for these rules as they become law and consult an attorney who specializes in small business regulations.
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