With only about seven weeks left until we turn the calendar to 2016, what do small business owners need to consider for the rest of the year and for 2016.
Here are some items to think about:
Sales Tax: North Carolina changed its sales tax rules effective March 1, 2016, for repair services to be subject to sales taxes. Currently, separately stated labor charges on repairs are not subject to sales tax. Parts are subject to sales tax. This expansion of the sales tax base will affect any business that performs repairs. Businesses will have to adapt their invoicing to capture the additional sales tax. From a consumer standpoint, your car repairs, your appliance repairs, your equipment repairs, will all cost more with sales tax added on labor costs.
Section 179 and Business Fixed Asset Purchases: Current law ( as of 11-12-15) limits the expensing of new equipment to $25,000. For 2014, Section 179 allowed a business to write off up to $500,000 of business personal property additions. Hopefully, Congress will extend this provision for 2015 and make it retroactive. This has been done in the past as last-minute December tax bills. We recommend that business owners proceed with purchasing needed fixed assets based on the hope that the $500,000 limit will be allowed for 2015. If the increased Section 179 is not extended, a business could still take regular depreciation on the assets and expense a portion of the costs in 2015.
Obama Care Reporting: All businesses with more that 50 full-time equivalent employees (related party entity rules apply) will have to provide their employees with IRS Form 1095-C which will list information about health insurance coverage paid by the company. This form will have to be provided to employees by January 31, 2016.
Obama Care Penalties: The penalties for large employers (those with more than 50 FTE employees) who do not offer health insurance will affect more businesses. For 2016, the employer may incur a penalty for each full-time employee over a 30 employee threshold. This threshold was 80 for 2015.