In Part I of our look at the business and economic outlook in 2014, we discussed some of the positive trends such as the strong recovery in the housing and energy sectors. In normal times, simultaneous recoveries in these two industries would give us plenty of reason to be optimistic about the prospects in the New Year. However, some extra hurdles facing businesses this year could put a little damper on their enthusiasm.
Business Tax Law Changes: A number of tax breaks for businesses expired at the end of 2013. The most significant were the accelerated depreciation allowance on new equipment purchases, certain research and development costs, and tax credits for hiring veterans. It is possible that Congress will act to restore some of the more popular tax breaks but during an election year, they are more likely to hold off on doing anything that is seen as a “tax break for the rich.”
There are a number of new government regulations that are expected to come down the pike in 2014 as well. There will be rule changes around pay & personnel disclosures, accounting, audits, liquidity, and several other areas. The impact of these new requirements on the health of businesses in the coming year and beyond remains to be seen.
Affordable Care Act Compliance: The one change from Washington that has business owners talking the most is how to comply with the Affordable Care Act. The good news is that the Administration provided a temporary reprieve by delaying the mandate for businesses to offer health care to employees in compliance with the ACA for one year. This mandate applies to companies with 50 employees or more, a loophole that some argue will cause small businesses not to hire extra employees (even if needed) if it means crossing that 50 employee threshold. To make sure you are ready for the implementation of the ACA mandate, it is important to get ready this year.
As Always, Preparation is Critical: The overall picture for businesses and the economy in 2014 is good. There is no reason to believe we will not experience at least some level of economic growth this year. Yes, Washington has thrown us some curve balls but that is nothing new. The key to success in business during the coming year and beyond is to ensure that you are prepared for all the tax law changes and the new health care law.
Speak with your accounting professional to go over how all these changes affect your business, and make the necessary adjustments to put your company in a position to grow and prosper.