A NEW CHAPTER: WHAT SMALL BUSINESS OWNERS SHOULD EXPECT FROM A BIDEN PRESIDENCY

On January 21, 2021, the nation will welcome a new president to address this country’s economic, political, and social concerns. Although a presidential shift presents various uncertainties for small businesses, it offers an opportunity to identify where change is proposed to occur and how it can affect your business. So, what does a Biden presidency mean for small business owners?

President-elect Joe Biden and his team have acknowledged that their first priority is addressing COVID-19 as a concerted federal effort instead of individual and diverse state plans. This unprecedented pandemic has forced many small business owners to close their doors. However, with a strong emphasis on extinguishing the national pandemic, recovering the economic blow, and providing social stability, Biden proposes new regulations to recover and support small businesses.

Biden seeks to implement many financial relief efforts for small businesses as part of an economic recovery plan. This relief effort would include a “restart package” that provides small business owners with support for retaining and rehiring workers in addition to covering certain recovery costs associated with COVID-19. Biden also promises to introduce a temporary interest-free loan program for small and medium-sized businesses as well as federal funds to support state-level small business relief efforts.

Most significantly, Biden has promised to restructure the mismanagement of the Paycheck Protection Program (PPP). The President-elect seeks to emphasize a stricter oversight of the PPP and other small business relief efforts to ensure that they support small businesses rather than large corporations. Biden seeks to reserve half of all future PPP funds for companies with 50 employees or fewer and provide more specialized assistance to minority-owned businesses. Also, Biden seeks to redirect unused corporation bailout funds and unused PPP funds toward supporting small businesses. The President-elect also proposes a $400 billion federal procurement program to provide federal contracting opportunities to certified small businesses. The program is projected, in large part, to target disadvantaged businesses.

Along with the numerous proposed funding options, Biden and his team promise to work to remove excessive licensing regulations in specific industries, which could significantly diminish burdensome annual expenses incurred by specialized businesses. The scope of a projected license removal initiative is unclear, however, if your business is inconvenienced by heavy licensing, be vigilant about developing this potential proposal.

What about tax implications? Although the public narrative is that tax rates are projected to rise under a Biden’s presidency, a narrower look provides a more realistic view of what Biden’s tax plan really means for small business owners. The first point of change is corporate tax rates, which are projected to rise, however, if your entity is not set as a C-Corporation, this change does not affect you. What you should be cautious of is a potential increased tax rate from 37% and 39.6% for individuals who earn more than $400,000 in income per year. In addition, strategic tax planning and attentiveness to opportunities for tax benefits targeted to small business owners will serve you well. For example, Biden has proposed to give small businesses a tax break for starting a retirement plan for workers. This seems to be one of the many potential pro-small business tax policies from the new Administration.

Although we can only identify general proposals of change, a Biden Presidency looks like an opportunity for small business owners to be proactive by strategizing how to circumvent disadvantages and utilize a new Administration’s advantages.

The SJS Law Firm can help counsel you on the implication of the new Administration on your business. For a complimentary consultation, please contact us at (202) 505-5309.

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