A few months ago I posed this question: New laws just put in place by the healthcare reform act are going to be costing companies significantly more than they have been used to. AT&T, for example, just took a Multibillion dollar hit to it’s bottom line due to these changes. 3COM followed with million charge as well, and many more large companies are hinting at drastic cuts coming very soon because they are all staring down the barrel off significantly lost revenue due to increased costs.
Are small & medium businesses in danger of becoming a statistic and falling prey to the new increased cost of doing business in the U.S.? According to some, this is all you need to know regarding the new Healthcare law: By 2014, states must set up Small Business Health Options Programs (SHOPs), which allow companies with fewer than 100 workers to pool their resources — and risks — to buy health insurance. Until the SHOPs are established, businesses with 10 or fewer full-time workers earning less than $25,000 on average will be eligible for a 35 percent tax credit. Firms with up to 25 workers with an average salary up to $50,000 will receive partial credits while businesses with 25 or more workers will receive no credit. Beginning in 2014, firms with more than 50 workers must offer health care coverage to employees or pay penalties of up to $2,000 per person for all but the first 30.
OK, Should just ignore the rest of the picture? By some counts, less than 12% of small businesses will fall within the strict limitations put on those tax credits. Don’t think even if you do fall within those limits that you’re going to see any benefits from it either. Save that cash because here comes the whopper that snatches it right back out of your pocket: Section 9006 of the health care bill — just a few lines buried in the 2,409-page document — mandates that beginning in 2012 all companies will have to issue 1099 tax forms not just to contract workers but to any individual or corporation from which they buy more than $600 in goods or services in a tax year. What small business is going to be able to handle this on their own? 1099’s for tangible goods too? They might as well print a W9 with your receipt at every register! If you think getting people to cooperate with sending you a W9 was difficult before, Wow! Calculate how many transactions over $600 you make each year and just watch the cost of collecting W9’s and producing 1099’s literally bury you in red tape.
Let that piece of news settle for a bit as all of the ramifications begin to sink in… Oh! Don’t forget; no more exemptions for Corporations. It’s not that simple either, 2,200 pages of new regulations look to cost small businesses in added consulting costs just to make sure that they are in compliance with all of the employer mandates so they don’t find themselves subjected to fines and penalties. The government agencies tasked whith creating the structure and foundation for SHOP still have not responded to any requests for information about how it is even going to work. Nor have they produced a single document even hinting at what that might be. Washington wants more revenue, and they don’t mind burying small businesses in the process. And, the IRS isn’t even scheduled to release it’s rules on the new tax laws until some unknown date next year, and the IRS doesn’t even know when that might actually be.
Realistically speaking, if you are one of those business owners that thinks you’re gunna slide by un some theory that “Government subsidy (welfare)” checks will help you slide by, then your short-sightedness will land you in some “Safe job” wishing you had paid better attention to the handwriting on the wall.
Want the whole picture? Try this for a wake-up call: http://www.nfib.com/insight/cmsid/51105
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