For owners of small businesses, every employee comes at an enormous expense. Paying salaries and providing benefits is only one piece of the puzzle – new legislation is constantly coming along that threatens to disrupt entrepreneurs' business banking status quo.
According to the Washington Post, the latest unnerving trend to emerge in small business legislation is a new tax on insurance providers in the proposed federal overhaul of healthcare. Under the new law, the insurance companies would owe more, and businesspeople fear that they may charge their clients higher premiums to compensate. The law is designed to rein in insurance companies, but it may hurt other, smaller enterprises instead.
Ryan Thorn, owner of a small insurance planning firm near Salt Lake City, says that the insurance companies themselves will have little to no role in dealing with the financial burden of the new tax.
"Insurers have confirmed back to me that the tax will be passed down to consumers, and the direct impact will be staggering," Thorn said, according to the Post. "It disproportionately hits individuals and small-business owners, the people who have been hurt most by these challenging times."
The reality of the new healthcare system will make things difficult for present and future small business owners. Here are a few tips to keep in mind moving forward.
Hesitate before starting a small business
If you're not a small business owner yet but you're considering becoming one, think twice. The Wall Street Journal cautions that between 50 and 75 percent of entrepreneurs fail to get their companies off the ground, and with the changing healthcare landscape, that figure may rise. Proceed with care, knowing that startup companies often find themselves in precarious financial situations.
Be careful with hiring decisions
If you do run a small business, be mindful that every hire you make will be a serious burden financially. Only add new staff when you're absolutely sure you can afford to do so – not only in the short-term, but down the road as well. You don't want to add a valuable team member but lay them off in a year because of the tax burden.
Consider running independent insurance programs
The Post points out that 82 percent of large firms choose to run their own healthcare programs, thus circumventing the insurance tax issues. Is this viable for your business? Maybe not, but it at least merits consideration.
The potential for steep healthcare taxes in the future is daunting for the small business world. Entrepreneurs should proceed with care.