Originally published on DandB.com
There has never been a better time to be a small diverse business owner in the United States.
With more and more attention being placed on diversity in the workplace, many companies, from small businesses to large corporations, are committing to diversity in both their hiring practices and their partnerships.
For many small business owners, this means a growing number of opportunities to work with influential companies and organizations as a diverse supplier.
Increased profitability and notoriety can be possible for your small business when you stay on top of employment trends, take advantage of current tax laws, and make the new healthcare requirements work for you.
Here are the top trends that are likely to have the biggest impact on small diverse businesses in 2016, and information to help you successfully navigate each to your advantage.
Tax Law
As a small diverse business, your company may be eligible for special development programs through the U.S. Small Business Association (SBA), and those who invest in your business may qualify for lucrative tax incentives.
Keep in mind that you won’t necessarily qualify for tax breaks because you’re a small diverse business owner. Instead, other companies, corporations, and investors may qualify for tax incentives by partnering with or investing in your business, which in turn can create more profitable opportunities for you.
If your small business is located in a distressed area or an empowerment zone, you may qualify for special tax deductions. While many diverse business owners qualify for incentives through these programs, accessing the benefits is primarily contingent on the geographic location of your business, and not the fact that your business is minority-owned.
Because tax laws often benefit small diverse businesses indirectly, it’s important to stay informed about tax changes that impact all small businesses, diverse or not.
In 2016, there are several tax law changes that stand to impact small diverse business owners.
Section 179 allows you to deduct up to 100% of the cost of qualifying business equipment or software purchased in 2015. If you bought any kind of equipment – from a new printer to a new company vehicle – you can deduct up to $500,000 off the cost of purchase.
Don’t forget to consider software or other online subscriptions purchased during 2015. The monthly fees you pay for CRM software or your email marketing program will most likely qualify for this deduction. Talk with your tax preparer for details.
Another important change that can impact small diverse businesses is that the standard mileage deduction has decreased from 57.5 cents per mile in 2015 to 54 cents per mile in 2016.
While you still can’t deduct the cost of commuting between your home and your business, small diverse business owners who work from home may be able to deduct mileage between their home office and other business sites.
Healthcare
One of the biggest changes small diverse businesses may face in 2016 is the application of the Affordable Care Act.
This year, businesses with 50 or more employees will be required to provide health insurance to the majority of their full-time employees, or face some pretty steep penalties from the IRS.
What’s more, if your small diverse business falls into this category, you will have to follow strict reporting guidelines in order to inform the IRS about the health coverage you’re offering to your employees.
If you have 50 or more full-time employees….
- You are required to offer health coverage to at least 95% of your full-time employees and their dependents up to age 26.
- If you don’t offer coverage, you may have to pay up to $2,000 per employee in fines.
- You are required to report how much you spent on healthcare for each employee by sharing that information on the employee’s W2 form. If you fail to report this information, or fail to report it on time, you could be fined up to $200 per employee.
Employment Classifications
If your small diverse business employs fewer than 50 employees, or you work primarily with freelance contractors, you may not need to offer health insurance or other benefits – yet.
With the rise of freelance workers in the United States and around the world, there is a growing debate about which type of employees should be treated like freelancers, and which should be considered traditional employees.
As a small business owner, chances are good that you’ve made use of freelance or remote workers in the past. Outsourcing administrative tasks, online business management, marketing, and other as-needed services can be a cost effective way to meet your business needs without hiring a full-time employee.
But what about a 1099 contractor who works 40 hours per week for your company? The U.S. Department of Labor argues that this type of worker should be treated as a kind of hybrid employee-freelancer, and offered benefits appropriate to that type of employment status.
In 2016, a new bill proposed by the USDL (USDL) will present a brand new category of worker. If the bill passes, small diverse businesses could be on the hook for additional costs, even when hiring freelancers.
While there are many potential new costs facing your small diverse business in 2016, there are even more benefits.
By forming relationships with companies that value diversity, pitching yourself as a diverse supplier, and applying for specialized status with the Small Business Administration, your small diverse business may able to take advantage of tax incentives, mitigate the rising costs of healthcare, and create a more profitable, sustainable business model in 2016.
To find a list of Fortune 100 companies committed to supplier diversity, visit SupplierEdge’s Supplier Programs page.
