There has been a lot of talk about what the projected fiscal cliff will mean for financial plans of both companies and consumers alike. Taxes and benefits may see massive overhauls, as well as federal budgeting and ongoing support for public projects. Businesses looking for startup loans and grants could be short for funds due to a lack of programs to assist them.
While there are a number of negative impacts that could come of this ponderous situation, but there are financial tips that companies can employ to prepare for this situation. Even federal agencies are taking action now to try and determine how to prepare for the worst case scenario, even though there is time remaining for legislators to come to an agreement. Just in case no consensus is brokered, organizations need to be ready for whatever the new year may bring.
Adjusting for tax increases
Financial plans don't need to be adjusted now, but companies need to ensure they have plans in place depending on what decision is reached come the beginning of 2013. The fiscal cliff, as it stands, could undo existing temporary tax cuts created during the Bush administration, and federal budgets for public services programs and other benefits could be slashed. If these elements are avoided, it could still mean that other increases in payroll deductions and additional taxes could weigh against corporate and client take-home.
CBS News wrote that the point of these cuts and adjustments is to try and offset the existing federal debt, building trillions of dollars worth of revenue for the government over the next 10 years. By taking more from American personal income and applying it to these debts, citizens will also be paying to keep federal programs operational. Systems like Medicaid and Medicare, Social Security and unemployment rely on deductions from paychecks to make up a vast part of their annual budgetary needs.
As the source pointed out, should the fiscal cliff come to pass, the first thing to be eliminated would be federal unemployment benefits. That means anyone who has already exhausted their state benefits would be without income, because these funds would need to be diverted to maintain other programs.
Healthcare and benefits
Regardless of taxes, income deductions are likely to go up no matter what the politicians agree upon, because the upcoming changes to national medical benefits laws will require more public funding. Under the Obama administration, healthcare benefits will now be available to all citizens for a reasonable price, Fox News reported, but only through the application of public funding. That means pre-tax money taken from every check will still go up.
On top of that, corporations must put their financial planning tools to work to brace for these healthcare changes as well. State and federal programs will require that businesses pay for every employee businesses don't opt into the system, and unless some other benefit plan is offered to workers, every full-time worker could cost companies huge penalties for lack of compliance.
As Fox News stated, even federal agencies have been advised to come up with strategies in case the fiscal cliff should come to pass. Consumers and corporations should have similar financial options in place, as revenue could decrease significantly next year, with Americans earning less and consumers confidence potentially endangered. Preparing now could help everyone weather the upcoming financial storm.