As small businesses prepare for 2014, they shouldn't focus solely on increasing their bottom lines.
Paychex, a provider of payroll, human resource and benefits outsourcing solutions, says it's equally as important for small businesses to be aware of the legislative issues that could affect their operations in the year to come.
"Navigating all of the legislative and regulatory changes that occur throughout the course of the year can be challenging, taking business owners away from other important aspects of running their businesses," said Martin Mucci, Paychex president and CEO.
To help companies prepare for the New Year, Paychex has identified the top regulatory issues small businesses should be mindful of, which include:
- Health care: Numerous provisions related to health care reform continue to affect small business owners and their employees. While small business owners aren't required to offer insurance to their employees, those that chose to do so will need to comply with reforms that take effect in 2014. Although the reporting and enforcement of the Employer Shared Responsibility provision was delayed until 2015, employers should determine their applicable large-employer status and ensure that appropriate tracking of employee hours begins in 2014. In a significant clarification regarding Flexible Spending Accounts (FSAs) for 2014, employers offering a health FSA must also offer group health-insurance coverage. The small business tax credit for employers that offer health insurance coverage will also change in 2014.
- Defense of Marriage Act (DOMA): The Supreme Court's DOMA ruling earlier this year, which expands the federal definition of marriage to include same-gender spouses, has a significant effect on federal laws, including payroll taxes and health insurance, as well as employment laws, such as the Family Medical Leave Act (FMLA). Affected employees are now eligible to pay for same-gender spousal benefits such as health insurance premiums and FSA/Section 125 participation on a pretax basis for federal taxes. In addition, employers may be entitled to a refund of federal unemployment tax on wages paid to legally married, same-gender spouses.
- Immigration and E-verify: Immigration reform very much remains on the radar of many in Washington. Highlights of proposed legislation that are of interest to businesses include mandatory E-verify requirements for all employers and the potential release in 2014 of a new version of the Employment Eligibility Verification Form I-9. The new Form I-9 is expected to contain enhancements designed to help employers maintain compliance with immigration laws.
- IRS priorities: The Supreme Court will begin hearing arguments in January to determine if severance pay should be taxable or exempt from FICA tax. If the court rules against the IRS, the agency will need to process retroactive refund claims submitted by employers and employees. The IRS has also announced its intent to more closely examine the taxation of tips and service charges in 2014. This will be important to industries in which tipping is customary, such as the hospitality and restaurant industries.
- Retirement: Policymakers are considering several items that could lead to changes in 2014 for businesses that offer retirement plans to their employees. Business owners should keep an eye on the possible attempt to amend retirement statements to provide lifetime income illustrations to 401(k) plan participants. These illustrations could include a projected monthly income stream based on predetermined variables such as account balance, current contributions and assumed interest rates.
- Employment regulations: Businesses should pay attention to the following potential items on the 2014 agenda: a worker's right to organize, continued enforcement for the misclassification of employees as independent contractors, vigorous enforcement of minimum wage and overtime provisions under the Fair Labor Standards Act, and strong support for an increase to the federal minimum wage.
- Privacy and data security: A current trend that is expected to continue in 2014 is the implementation of additional measures on the state level to strengthen security and privacy regulations. It has never been more important for businesses of all sizes to protect the personal, financial and health information of both customers and employees, and to ensure they are adequately protected against the growing threat of cyberfraud.
- Mobile technology: As the use of wireless devices and mobile apps continues to grow, more businesses are adopting Bring Your Own Device or Bring Your Own Technology policies that allow employees to use their own mobile phones and tablets to conduct company business. Businesses could see new regulations and guidance in the New Year on how to balance employer software, productivity and data security demands with the privacy, ownership and compensation rights of the employee.
- Banking: In response to the well-publicized regulatory challenges many banks have recently experienced, some are adopting stricter policies around customer relationships. This increased due-diligence may result in changes to the requirements imposed on small businesses, or even the availability of credit and other banking services. Expect banks to focus specifically on payroll card programs. Businesses offering this option to employees should ensure their card providers are well versed in the relevant federal and state regulations.