2017 will certainly be a year of uncertainty for small and medium-sized businesses, particularly as the new president-elect has sent mixed signals about his positions on health care, minimum wage, tax reform, and trade agreements. In the meantime, however, some important changes will definitely be going in affect this year that affect many small businesses.
Due dates moved forward for key tax forms
Businesses are now required to furnish yearly W2s to employees and 1099-MISC to independent contractors by January 31 of the following year. This is one month earlier than the February 28 deadline in past years (March 31 if filing electronically).
In addition, all partnerships (including LLCs that file as partnerships) utilizing calendar year-end accounting must file Form 1065 by March 15 instead of April 15—this is a critical change that affects most partnerships. Several states have also accelerated their due dates for state partnership income tax as a result of these federal changes, New York and California being two notable ones.
Minimum wage changes in 19 states
Many states will be seeing increases in their minimum wages this year, either through recent ballot initiatives or through previously scheduled increases. Notably Massachusetts and Washington states will see increases to $11 per hour, and Arizona, Vermont, Connecticut, and California will all rise to $10 per hour or higher. (See the Wall Street Journal's chart below.)
New York, which aims to increase its minimum wage to $15 over the next several years, will see several tiers of wage increases based on counties. Business with more than 11 employees in New York City will need to pay a minimum of $11 per hour ($10.50 for businesses with 10 employees or less). The minimum wage for Nassau, Suffolk, and Westchester Counties will raise to $10 per hour, and for the rest of the state $9.70 per hour.
Adding to the complexity is the minimum wage for fast-food workers in New York, which have a different time table for wage increases. Fast food establishments will have to pay a minimum of $12 per hour this year in New York City, and $10.75 per hour in the rest of New York.
Health Reimbursement Arrangements now legal for small employers
Currently, small business owners (typically those with less than 50 full-time employees) are exempted by the Affordable Care Act from having to provide group health plans to their employees. Starting in 2017, those exempted companies that would still like to help their staffers pay for insurance coverage or out-of-pocket expenses can now do so through Health Reimbursement Arrangements (HRAs).
Since the ACA went into effect in 2014, stand-alone HRAs (those offered to employees without the option of a group health plan) were prohibited. Now an exception has been made that allows small companies to offer HRAs to their employees, in a plan called a “qualified small employer HRA.” As always, the regulations regarding these new requirements are relatively complicated; we recommend speaking with a specialist to make sure your company is in compliance.
What changes lie ahead for small businesses?
While we can’t say for certain what domestic agenda the new presidency will pursue, there are some hints that the new government will be anti-regulation and highly critical of worker protections. For more insights, The New York Times has an article profiling Donald Trump’s potential Labor Secretary, Andy Puzder.
Despite potential changes at the federal level, many liberal-leaning states have expressed a commitment to maintaining progressive values in the coming years. Many governors, including those from New York, California, Washington, Oregon, and Colorado have said that their states will continue to fight on key issues such as health care, education, climate change, and immigration, despite what the federal government may do.