Another year, another slew of business-altering news: 2013 was filled with many issues, challenges and opportunities that will change how small-business owners run their operations, market themselves, manage their employees and, ultimately, how much money they make. Here’s a look at 10 of the most important news events affecting business owners in 2013.
10. Minimum-wage debate rages on. Controversy over whether to increase the federal minimum wage riled and divided business owners. Officials in SeaTac, the small town by Seattle’s main airport, recently voted to raise the local minimum wage to $15 an hour in January—which is sure to become a case study for how greatly increasing the minimum wage affects both businesses and local economies. In the meantime, President Obama and U.S. Senate Democrats have pushed to raise the federal minimum wage above $9 an hour. A Gallup poll from November showed that small-business owners are split nearly 50-50 on the question of whether they support raising the national minimum wage to $9.50 from its current $7.25.
9. Social media sites wrestle more money from business users. One trend that surely annoyed business owners in 2013 was the ongoing attempts by major social media sites to extract more money from them—sometimes in disruptive ways. Facebook recently announced it would greatly reduce the exposure of small-business Facebook pages unless businesses pay to promote them, while Yelp continued to fend off claims that it bullies business owners into buying ads. Twitter said in its IPO filing that it’s expanding the space it devotes in users’ feeds to Promoted Tweets, and Foursquare rolled out an advertising program for local businesses. Looking ahead to 2014, some key questions: How effective will social media sites be in generating revenue from small businesses? And will business owners need to rethink their social media strategies because of all these changes?
8. Startups embrace the “sharing economy.” Whether it’s hitching a ride through Lyft or shacking up with locals through Airbnb, Americans have become increasingly enamored with the concept of borrowing instead of buying. This has fueled a wave of new companies focused on making it easier for people to forge such deals. Though sharing has gained steam, some business owners who compete with these sites (think auto-rental companies and bed and breakfasts) aren’t so keen on the trend. They at least want people who make income off sharing to pay their fair share of taxes.
7. High-earning business owners face higher taxes. Many business owners saw their taxes rise in 2013, after Congress voted to raise tax rates last January. Individual filers with taxable incomes of $400,000 or more and couples with taxable incomes of $450,000 or more saw their tax rate jump to 39.6 percent. A new 0.9 percent. Medicare tax will also be imposed on individuals’ income above $200,000 and couples’ income over $250,000.
6. The government shutdown hits small businesses’ profits. The federal government shut down in October for the first time in 17 years. The 16-day partial shutdown took a $24 billion bite out of the U.S. economy, according to Standard & Poor’s, and many small businesses, from federal contractors to businesses situated near national parks, suffered. The Small Business Administration also suspended its lending operations, meaning many unprocessed small-business loans were left in limbo. Republicans in Congress vowed to not let another shutdown happen on their watch, yet another battle over the debt ceiling is brewing for early 2014.
5. Sales of small businesses soar. Business owners looking to retire by selling their business may finally have gotten their opportunity. Small-business transactions jumped 41 percent year-over-year in the third quarter of 2013, according to data from BizBuySell.com. The median sales price rose 2.9 percent over that same period. “Many Baby Boomers have been looking to exit their business and retire for some time now, but either haven't been able to close the sale or have delayed selling in hopes of a higher price once their business performance and the economy recovered,” BizBuySell said in its report. “The confidence of such owners that they can now receive an appropriate sales price in a reasonable time appears to have blossomed and supply is coming onto the market.”
4. Online sales tax legislation gets Senate approval. The U.S. Senate quickly passed legislation in May that would require retailers with more than $1 million in revenues to collect sales taxes from online customers in all states and localities that charge sales taxes. The passage panicked and angered many online retailers that said they weren’t prepared to collect sales tax. At the same time, it pleased many brick-and-mortar retailers that feel online retailers have an unfair advantage. An online sales tax collection law seems stalled for the moment, however. U.S. House members expressed strong dissatisfaction with the Senate bill and said they planned to completely redo it.
3. Equity-based crowdfunding goes mainstream. Equity-based “crowdfunding”—when an individual invests in a company in exchange for part ownership—became legal, thanks to the Jumpstart Our Business Act of 2012. Historically, only accredited investors were allowed to make equity investments in privately held companies. The Securities and Exchange Commission proposed rules for federal legislation that will likely get passed next year. Meanwhile some states have already moved forward with their own crowdfunding legislation. Allowing companies to raise funds from individuals has spawned many new crowdfunding websites and could dramatically change the way many businesses engage potential investors.
2. Small businesses recovering from recession—slowly. The U.S. economic recovery, though uneven and slow-moving, seems to have finally reached many small businesses this year. The most recent ADP National Employment Report showed that small businesses added an average of 76,000 jobs a month in 2013 through November, compared with 63,000 per month in 2012. An assessment of a survey conducted by National Federation of Independent Business (NFIB) last summer found that a variety of measures of small-business economic health—such as credit availability, sales expectations and inventory plans—have approved considerably since the brunt of the recession in mid-2009, but still remain worse than pre-recession levels.
1. Obamacare makes rocky, delay-filled debut. Few laws have invoked so much fear and anger as the Affordable Care Act. For months, economists and political pundits debated how federal health care reform would affect businesses, large and small. But by summer, reality started to set in—for better or worse. The employer mandate piece of Obamacare, requiring businesses with 50 or more full-time equivalent (FTE) employees to offer health insurance to their employees or pay a penalty, was delayed until 2015. The Small Business Health Options Program (SHOP) enrollment was also delayed another year. And after millions of people received policy cancellation notices from their insurers, the Obama administration announced that many businesses would be able to keep their ACA-non-compliant policies until late 2014. More pessimistically, business owners got a first taste of what their premiums will be under Obamacare—and many weren’t pleased to discover that their rates will jump considerably.
Of course, many of these issues and debates are far from settled. The question many business owners are asking now: What will 2014 bring?
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