This year has been a year of significant changes for small businesses. Major changes in regulations, reporting requirements, and payroll minimums could affect your business and bottom line. The first step in ensuring your small business can weather the storm is understanding the regulations and how they might affect your business.
This year’s first change is beneficial ownership interest reporting or BOI. Beneficial ownership reporting is required by most small businesses with fewer than 20 employees.
There are specific exceptions, including some for large companies and non-profits. To complete this reporting, small businesses must log in to the FinCEN website and report all small business owners. This reporting could also cause non-owners to have to be listed, depending on their involvement with the business and the involvement of actual owners of the business.
Small businesses will find this easy to comply with regarding the reporting requirements; however, the concern is that the government is systematically gathering information on all small businesses to which it may not be entitled.
This information will also be shared with banks and other organizations. Several lawsuits exist, including one from the Small Business Administration seeking to prevent data collection and ensure that the website has the appropriate levels of security.
Our advice: Wait until the third quarter of 2024 to make any filing decisions. When you are ready to file, check out the BOI Small Entity Compliance Guide and check with your tax and legal professionals.
Another significant change for 2024 is independent contractor versus employee analysis. For many years, the IRS has been clear that if someone’s relationship with a business looks like an employee relationship, it is probably an employee relationship.
They have made additional changes to the guidance and requirements that will be reviewed when making these determinations. We expect that there will be more audits of these classifications as the IRS begins to review Form 1099 filings, business tax returns, and their related W-2 Forms.
For businesses, this could mean additional payroll taxes and fines or penalties. Independent contractor versus employee classification remains an important business decision.
Our advice: Work with your CPA and attorney to determine if your team should be classified as employees or independent contractors. Remember that a contract alone cannot qualify a worker as an independent contractor.
A third significant change for employers in 2024 has the potential to be quite substantial.
The Department of Labor has announced a new rule increasing the minimum amount an employee must earn to be classified as salaried exempt.
The changes will nearly double the pay rates for qualifying for exemption and begin on July 1, 2024. Regardless of job duties, employees could be classified as qualified for overtime pay based on this regulation and their salary threshold.
While this may benefit employees, it will undoubtedly add expenses to businesses that must be prepared for the additional costs. The increases to minimum salaries continue through 2027 and will be automatically updated every three years.
Our advice: Review every employee’s pay rate and job duties with your CPA or payroll processor.
Finally, in 2024, a new piece of legislation was passed for the City of Jacksonville that requires adult changing tables in bathrooms. This applies to businesses with six or more toilets, but only when new construction or significant renovations exist. The cost could be substantial and would undoubtedly apply when there are build-outs for leases.
Our advice: Review Ordinance 2023-0780 before making any changes to your building or leasing space and understand the requirements. Also, read any leases carefully.
This year promises to be momentous for small businesses on the First Coast; however, implementing these four new requirements could be challenging. It is imperative to take the time to implement each of these items properly and to involve your financial and legal professionals in this process.
If you would like a personalized assesment, please contact us.
(904) 725-5832 • fordefirm.com
5150 Belfort Rd #300, Jacksonville, FL 32256