New rules affecting business operations will emerge in 2024, reshaping the business landscape. These adjustments aim to instill fairness and transparency in the market. Adjusting to these new regulations is essential for enterprises to keep their competitiveness.
Regulations can prove beneficial and problematic equally. They are designed to enhance business transactions, prevent illegitimate and unjust practices, and ensure adherence to requirements. However, often, small enterprises hit roadblocks due to their business model.
Below are the key regulations that we need to look at:
Mandatory Registration with FinCEN: In 2024, small businesses will be required to register with a governmental organization known as the Financial Crimes Enforcement Network, as per an act approved in 2021 called the Corporate Transparency Act.
Companies with over 20 employees and over $5 million in sales may be qualified for exemptions. Nevertheless, approximately 32 million small businesses are not exempted. The owners and co-owners of these businesses are required to register personal particulars with FinCEN, like a photo identity and residential address.
Even amidst legal opposition, the regulation will be enacted in 2024. Yet, the deadlines have been prolonged. The deadline for existing businesses has been shifted to Jan. 1, 2025, instead of Jan. 1, 2024. Companies set up after Jan. 1 have merely 90 days for compliance, up from 30. The penalty for non-compliance may be hefty, with fines amounting to as much as $10,000.
Reporting Digital Transactions above $600 to IRS: The tax department has once again postponed the requirement that mandates all transactions above $600 conducted via smartphone app-based payment platforms should be reported. This requirement, incorporated in the American Rescue Plan, was delayed last year, with implementation set for tax year 2023. However, businesses will not have to report this revenue for 2023. The threshold for reporting is planned to be $5,000 for tax year 2024.
New reporting requirement for small business loans:
Producing loans for small businesses is relatively challenging since they often need more financial stability or credible performance records to assure banks of their ability to repay the loan. Minorities and women-owned businesses usually find it challenging to secure loans.
In a step towards less bias and more openness around loan processes, the Consumer Financial Protection Bureau stated this year that it would mandate banks to report applicant demographics and incomes. The goal is to generate a database similar to what the mortgage industry has. The data collection will assist regulators in identifying potential signs of discriminatory lending behavior.
National Labor Relations Board joint-employer rule:
In October, the National Labor Relations Board reworked the joint employer rule, widening the definition of a “joint employer”. This implies that two businesses participating in decision-making about employees can be held liable for unjust labor practices. The rule applies only to labor relations and businesses under the National Labor Relations Act, primarily private-sector companies.
Unions and workers’ groups argue that the new rule will benefit workers by safeguarding them, but small business advocacy groups say it needs to be more demanding for small businesses.
Wages and Overtime:
Over 20 states will witness minimum wage hikes in 2024. For instance, the minimum wage in Nebraska will increase by $1.50 to $12 on Jan. 1, while Florida’s minimum wage will climb by $1.00 to $13 on Sept. 30. The Department of Labor made announcements in August proposing a rule that would allow an additional 3.6 million workers to qualify for overtime. This proposed regulation would mandate employers to pay overtime to executives, administrators, and professionals earning less than $1,059 per week or equivalent to $55,068 a year for full-time employees, which is a raise from $35,568.
So, what do you think of these new regulations? Will it affect your business or help your business?