Can your company thrive in 2013?

Changing laws, taxes, technology and economic prospects will challenge small businesses this year. Here are some tips on adapting

vbridges@newsobserver.comDecember 31, 2012 

  • Tax changes would differ for rich, poor and middle class If there is no compromise, the fiscal cliff could boost taxes by more than $500 billion in 2013 because of expiring temporary tax provisions. Nearly 90 percent of Americans would experience a tax increase, primarily because of the temporary cut in Social Security taxes and the expiration of the 2001 and 2003 tax cuts. Low-income households would pay more because of the expiration of tax credits in the 2009 stimulus. High-income households would face higher tax rates on ordinary income, capital gains and dividends. SOURCE: Tax Policy Institute

Small business owners face many uncertainties heading into the new year. They have to prepare for under-construction health care reform, face the consequences of the fiscal cliff resolution and make the best of an economy dependent on those key moving parts.

Here are three areas that experts say small business owners should watch in the coming year.

Health care

This year, small business owners will need to make decisions related to health care reform and plan for its 2014 implementation. Owners can also expect an increase in related fees and taxes.

“They are going to have to educate themselves, plan for the impact, and educate their employees as much as possible,” said Kevin Kuhlman, legislative affairs manager for the National Federation of Independent Business, which has more than 350,000 members. NFIB argued against the Patient Protection and Affordable Care Act when Congress was considering it and was the prime litigant in the U.S. Supreme Court case in June.

The act requires that all Americans have minimal health care coverage by 2014 or pay a penalty. Employers with 50 or more employees, or the equivalent, will have more responsibilities, but employers with fewer workers will also feel the impact, Kuhlman said.

In 2013, businesses will have to determine whether they fall in the “large” or “small” category for the employer mandate. A sole employer with multiple businesses that are unrelated but employ 50 or more full-time employees will likely be counted as a large employer, Kuhlman said.

Businesses will also have to determine whether employees are full time – average about 30 hours a week – or part time, and apply a new counting requirement to ultimately determine an employer’s size. For example, if six employees work five hours per week, they will count as one full-time-equivalent employee.

David Crump, president of Employee Benefits Consulting in Raleigh, said as more information is released over the year, large employers need to take a close look at their group medical coverage and determine how their rates will be affected and whether it would be more affordable to pay a penalty and not provide insurance.

“Business people are always going to do the math, and they are going to do what costs them the least,” Crump said.

Taxes

At press time a deal appeared to be emerging, according to reports out of Washington.

But small business advocates have expressed concerns that even if a deal is reached it won’t give small business owners peace of mind.

“It almost surely won’t be comprehensive enough that we won’t be revisiting it next year,” Todd McCracken, president of the National Small Business Association, told the Associated Press.

Henry Burke, co-owner of Burke Brothers Hardware in Raleigh, which has been in business since 1931, said Monday he was beyond frustrated.

“You can’t do any planning because we don’t have a clue what they are going to come up with,” Burke said.

Molly Brogan, vice president of public affairs for the association, said its concerns center on rising income tax rates for higher-income earners who own small businesses, the estate tax, the alternative minimum tax, and Section 179 of the tax code, which allows small businesses to deduct business equipment expenses up front rather than depreciate the items’ costs.

In 2011, the expensing threshold dipped from $500,000 to $125,000. The threshold is scheduled to drop to $25,000 in 2013.

Growth opportunities

Small business owners should explore both conservative and optimistic scenarios in 2013, said David Grant, president of Raleigh SCORE, a nonprofit organization that offers free counseling and workshops to small businesses.

“So you don’t lose opportunities that may be forthcoming,” Grant said.

Many business owners in recent years have tried to cut and manage costs, Grant said.

“People have to think a little differently as to how to start to grow again and get out of the mold of cost cutting,” Grant said.

Businesses should also think about expansion strategies, including improving customer service, incorporating social media and a mobile website, securing additional capital and exporting.

“I think there’s tremendous opportunities in 2013 for some of the small and midsize businesses in North Carolina to tap into these foreign markets,” said David Robinson, special counsel for Nexsen Pruet, a law firm that helps businesses with exporting. “More so than in previous years because some of the bigger players have retrenched and pulled back from markets. And so I think there is market share up for grabs for those that are nimble enough to pounce as the world recovers.”

Martin Brossman, with Martin Brossman and Associates, a Raleigh company that provides business coaching, integrated web marketing and social media, said businesses need to be mobile ready.

“If you have got to take your fingers and spread them out on a smartphone, it is not mobile ready,” Brossman said.

Greg Lewis, Catering By Design owner and chef, set up a mobile website for his business, and he plans another for his Pittsboro Roadhouse & General Store in 2013.

The site allows customers to find and contact him easily, Lewis said.

Internet marketing, along with a quality staff, has allowed his catering business to grow from 15 percent to 40 percent annually, while the economy has been shrinking, Lewis said.

“It gets people to contact you, it gets people in the doors,” he said. “But once they are in the doors, you have to be able to perform.”

Bridges: 919-829-8917

News & Observer is pleased to provide this opportunity to share information, experiences and observations about what's in the news. Some of the comments may be reprinted elsewhere in the site or in the newspaper. We encourage lively, open debate on the issues of the day, and ask that you refrain from profanity, hate speech, personal comments and remarks that are off point. Thank you for taking the time to offer your thoughts.

Commenting FAQs | Terms of Service