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New Business Regulations in 2020 and How They May Affect Your Small Business
Staying on top of new regulations for small businesses helps you make the most informed decisions possible.
You can make sure you follow rules relevant to your industry when you know which laws and regulations have changed. You can also find opportunities for larger tax deductions and other benefits. Let’s look at some new regulations for small businesses that will impact your operations in 2020.
Updates to Section 179 Tax Deductions
Section 179 of the U.S. tax code gives businesses the opportunity to fully deduct the cost of equipment and software acquired or financed during a given tax year, as Section179.org detailed. Businesses can choose to deduct the full cost of these assets from their gross income. This reduces their tax burden and can lead to notable savings.
Section 179 isn’t a new addition to the tax code. It has been available to businesses for many years. However, certain parts of this section of the tax code are sometimes updated. This is the case for 2020, when an important new change came into play: The total deduction amount allowed through Section 179 increased to $1,040,000.
There are two other factors to keep in mind for Section 179 deductions in 2020:
- Bonus depreciation of 100% is still available. Bonus depreciation offers a similar result to Section 179 deductions. It’s mostly useful to large businesses that exceed the total spending cap placed on Section 179 deductions. However, small businesses making large investments into qualified assets can use both strategies to maximize their tax savings.
- The cost of new and used equipment, and other allowed assets, can be deducted via Section 179. If you’re more comfortable with the reduced costs of purchasing used equipment, your company can still benefit from using Section 179 deductions.
To learn more about the Section 179 tax deduction, read our in-depth article on the topic. And remember to always consult a qualified professional before making major tax decisions.
Minimum Wage Increases
The federal minimum wage hasn’t increased. The Associated Press reported this payment floor rose or will rise in 21 states, however. States with large populations, like California, Illinois, and New York, all saw their minimum wage go up.
This update doesn’t only affect small business owners who pay minimum wage. Other jobs may be more attractive with higher payment on the table. Business leaders need to consider how to keep their best employees aboard. Options include raises, improved benefits, and promotions.
Keep an eye on the wage laws in your state to stay ahead of the game.
New Gig Economy Restrictions
California often adopts laws that eventually become common in other states. It recently restricted the use of independent contractors. The AP said many businesses may have to hire current contractors as employees. They can also choose to work with freelancers who reside in other states.
This law is currently in flux. Companies that use independent contractors are challenging the rule. California may also expand the list of fields where the use of such workers is exempt. New laws don’t always remain on the books. But for now, companies will have to follow these rules.
Even if your company isn’t based in California, it needs to keep a close eye on the current rule if one of the following applies:
- Your business hires independent contractors who reside in California.
- Your state takes steps to enact some form of similar legislation.
Potential New Rules
It’s a good idea to check in on the potential for new laws as well. Forbes contributor Wayne Rash singled out two areas relevant to many small businesses:
- Federal privacy laws. The federal government may try to standardize rules related to personal and sensitive information. Some states currently have such laws in the works or in place.
- Security laws. The federal government and some states may increase the consequences for businesses that don’t keep customer data safe.
These laws could arrive sooner rather than later. They may be applied across the country or only in some states. Companies that handle concerns like payment data and personal information will likely have to make changes if that happens.
Effective Funding to Support Change
Funding is a core concern when new regulations for small businesses require action. Moving your company forward often requires an infusion of cash to remain productive and focused on your industry. QuickBridge is here to quickly, securely, and effectively fund your business as it addresses these new rules. To learn more, get in touch with us today.