For small businesses, the biggest change in the new year will be the arrival of a business friendly administration in Washington. But there are other changes owners should keep in mind.
Among them: changes to state-level overtime and minimum wage rules, delayed federal FinCEN registration, taxes on payments from third-party vendors like Venmo and PayPal, and everything else that could affect inflation, including rates.
The Small Business Administration also welcomes a new leader, Trump loyalist Kelly Loeffler, assuming she is confirmed by the Senate.
“I think there’s a general feeling that there’s obviously going to be a pro-business administration on the regulatory side,” said Karen Kerrigan, president and CEO of Small Business. & Entrepreneurship Council, an advocacy group. “But there might be some nuances specifically, for example, on the workplace or on the rules of work. But this remains to be determined.
Here’s what small business owners should keep in mind in 2025.
Inflation remains a wild card for 2025. Inflation has retreated from its peak of 7.2% in June 2022, according to the Fed’s preferred indicator, standing at 2.3% in October. Actions taken by the Federal Reserve and the new Trump administration are likely to tilt inflation one way or another.
On Wednesday, the Federal Reserve raised its inflation rate projection for 2025 to 2.5%, up from a previous estimate of 2.1% released in September. The Fed too expects only two rate cuts for the yearagainst four. Persistent inflation and high rates could mean higher costs for consumers and businesses.
In the meantime, Trump proposed a series of tax cuts – on social security benefits, tipping and overtime – as well as a relaxation of regulations. Collectively, these measures could boost growth. At the same time, Trump threatened to impose a variety of prices on imports and search mass deportations migrants, which could accelerate inflation.
Regardless, inflation will certainly remain a priority for small business owners.
“What we’ve seen over the last two and a half years is that inflation is the number one concern for small businesses,” said Tom Sullivan, vice president of small business policy at the Chamber of Commerce of the United States. “When we think about 2025, the important question arises whether or not the new president’s policies will bring down inflation.”
Established in 1953, the SBA has gone through many different administrations. The agency provides resources to small businesses and helps administer small business loans and disaster recovery loans. He played a crucial role during the pandemic, helping distribute aid to small businesses.
Trump said he would appoint Kelly Loeffler, former US senator from Georgiaat the head of the SBA, pending confirmation. She replaces Isabella Casillas Guzman, who has been its administrator since 2021. A staunch Trump loyalistLoeffler also serves as co-chair of its inaugural committee.
Loeffler has not made any statements about the SBA’s plans.
“I wouldn’t expect any change or drastic change in the loan terms and some of these programs, I think that will happen over time,” said Kerrigan of the SBE Council.
As a nationwide federal rule expands overtime coverage to millions of Americans was blocked by a federal judge in NovemberSeveral states still have an increase in the overtime threshold going into effect, and these are not affected by the hold.
Six states are raising their overtime pay threshold: Alaska, California, Colorado, Maine, New York and Washington. For example, in Alaska, the overtime payment exemption threshold will increase from $48,796.80 in 2024 to $54,080 on July 1.
“Employers will need to be aware of these thresholds and ensure they are complying with state law if they have employees in one of these states,” said Tyler Yamnik, an attorney specializing in labor law. work and human resources consultant for the company RH Engage PEO.
At the same time, 23 states and 65 cities and counties have planned minimum wage increases that will take effect in 2025, either on Jan. 1 or later in the year.
Rich Kingly, CEO of Driveway King in Garwood, New Jersey, which renovates driveways and driveways, said he is monitoring state-specific minimum wage changes.
“As we operate in multiple states, remaining compliant with each state’s rules and regulations is an ongoing challenge,” he said. “As the minimum wage increases, it adds to the financial pressures of running a business, especially in the face of fluctuating material costs and competitive pricing. »
A rule that would require millions of small businesses to register with an agency called the Financial Crimes Enforcement Network, or FinCEN, by Jan. 1 is currently temporarily stuck in court.
Registration is part of the Corporate Transparency Act, an anti-money laundering law passed in 2021. Registration is not difficult. Owners and co-owners of these businesses must register personal information with FinCEN, such as a photo ID and home address.
But small business groups say the regulations are too burdensome. If this measure comes into effect, small businesses that do not comply could be fined up to $10,000. Businesses with more than 20 employees and a turnover of more than $5 million can benefit from exemptions.
Steve DiMatteo, CEO of e-commerce site Cleveland Vintage Shirts, said he had difficulty tracking down registration information due to a lack of communication from the government. He sought advice from an X account that helps small businesses.
“My biggest concern comes from this experience: What other rules and regulations will I miss due to a lack of clear communication from government, whether at the state or federal level?” he declared.
Another regulation that has concerned small businesses for several years concerns taxes on payments through third-party applications such as PayPal, Cash App, Venmo and similar platforms.
Traditionally, the threshold for reporting revenue from third-party app payments was $20,000 and 200 transactions. But the American Rescue Act significantly reduced that amount to $600 and up, with no transaction minimum.
The regulation was delayed in the last two yearsbut small businesses paying taxes for 2024 will now be required to pay taxes on anything over $5,000 as part of a phase-in to eventually implement the $600 reporting threshold.