Small Business Changes Coming Soon
August 9, 2019
As a small business owner, you’re probably used to dealing with changes. Between staffing, accounting, and other day-to-day operations, adaptability is one of your biggest assets! While we can’t help you predict the future, we can work with you to prepare for whatever comes next. Since we’re a small business ourselves, as well as professionals in the financial field, we try to stay on top of the latest news. In light of coming legislation, here’s what you need to plan for:
An Increase in the Minimum Wage
Hopefully, you’ve already heard about this, but it’s not too late (or too soon) to start working your way up to higher salaries. In March, Maryland legislators introduced a bill requiring a gradual increase in the minimum wage. At this point, small businesses must match the level set by the state—which is $10.10 per hour. On January 1, 2020, the minimum wage increases to $11.00. By 2025 or 2026 (depending on the size of your workforce), you’ll have to pay all of your employees at least $15.00 per hour.
Pennsylvania still lags behind, observing the lowest minimum wage allowed by law ($7.25 per hour). But lawmakers in the state are already working to change that. As neighboring states (including Maryland) offer increasingly competitive rates, their workforce is starting to drift. To combat this move, several plans for a similar wage shift are being proposed this year.
Already , local business owners are worried about the impact this could have on both their employees and their operations. In order to offset the additional costs of a higher minimum wage, companies may have to reduce their workforce. Or look to cut spending elsewhere. Rather than wait to process these payroll changes at the last minute, let’s review your accounting now. We’ll find a gradual plan that works for your small business, while keeping you in compliance with legislative changes.
Interest Rate Changes
If you’ve been watching interest rates this year, then you’re probably a little confused. Such a small number, controlled by the Federal Open Market Committee (otherwise known as “the Fed”), can have a big impact on your business. When you’re waiting for the right time to take out a small business loan, buy new equipment, or even acquire real estate—interest rate changes matter. A higher rate will lead to larger payments and greater debt over time. But low interest rates aren’t always a good indication.
These changes are tied to the overall health of our economy. When things aren’t going well, the Fed will lower interest rates to give it a boost. As situations improve, they tend to increase this number gradually. In an attempt to control economic growth and contain inflation. Last year, for example, the Fed voted to increase interest rates several times—but only by small increments. Recently, though, interest rates have remained stable and there are even talks about a tiny decrease in the near future.
Don’t stress yourself out about this subject too much. As a small business owner, you have enough to worry about! Just talk to your advisors at Bounds Accounting before making any drastic changes to your financing. Together, we’ll look at trends and determine a timeline that will help you take advantage of interest rate changes, while still meeting your goals.
For more information on these and other upcoming changes, feel free to contact us directly! At Bounds Accounting, we work with many small business owners throughout Maryland and Pennsylvania. Although we can’t predict the future, we are here to help you plan for yours.