Last year was demanding for small business. If predictions hold true, 2013 won’t exactly be much easier. Small businesses face the same challenges they saw in the last few months of 2012, but added uncertainty from Washington about healthcare and tax increases may make things a bit worse.
The three main challenges for small business in 2013:
Challenge 1: Small business Tax Increases.
Some tax analysts see 2013 as the right combination of factors for higher tax rates, and they predict it will come in various ways. Not only will maximum ordinary income tax rates increase from 15 to 20 percent, but maximum tax rates for dividends will also rise from 15 percent to a new top of 39.6 percent.
Making things even more difficult is the decreasing benefits from Section 179 deduction. This drop will be from a $139,000 limit in 2012, to $25,000 this year. This is a tax environment which will be unpleasant for small business owners to swallow.
Challenge 2: Healthcare Reform
Few people argue that the Affordable Care Act will not have an impact on small businesses. The main problem comes from the uncertainty over exactly what that effect will be.
No matter what, small businesses will undoubtedly see increases in overhead, with substantial charges if businesses do not comply.
With a cost of almost $4,000 per employee, some restaurants, hospitality, retail and small businesses want to cut back on full-time workers, forcing employees down to part-time hours as a plan to get around the requirements for companies with more than 30 full-time employees.
More employees working fewer hours will surely have an impact on small business, and it’s not expected to be a promising one.
Challenge 3: When is the right time for small business financing?
Lenders seem to be ready and willing to lend, but some small business owners are shying away from seeking out financing. Holding out on loans and financing during uncertain times usually makes good business sense, but it may not in this case. Some business experts are recommending that now is actually the best time to receive financial help.
A working capital loan could be the right answer of the small business owner who needs to catch up from underperforming cash flows, or those looking to offset the costs of the Affordable Care Act. Small business owners will have to resist doubt in order to stay afloat during 2013, by hiring new employees and reinvesting in their business.
Yes, the hurdles will be high in 2013, but one thing is clear—the small business community will unquestionably win this year, emerging even better and stronger than before.
What do you see as the challenges for small business in 2013? Join the conversation below!
Related articles
Media Meme 