New Laws for Small Businesses 2021

Many companies have two types of employees on the payroll: employees and hourly workers. Employees earn the same amount each week, no matter how many (or few) hours they work. They are also known as “exempt” workers, meaning they cannot earn overtime if they work more than 40 hours per week. Most notably, the new regulations in 2021 respond to the current COVID-19 pandemic — and the pandemic`s financial stress for small businesses — with another round of federal loans and grants. Several states updated their minimum wage and sick leave laws in the new year. And an older change in 2020 is worth mentioning, as it is a lifeline for small business owners when facing bankruptcy. Resources for taxpayers filing Forms 1040 or 1040-SR, Schedule C, E, F or 2106, as well as for small businesses with assets of less than $10 million. As of October 3, 2021, the minimum wage for exempt employees in Pennsylvania is $780 per week. A small business that declares Chapter 11 bankruptcy can now take advantage of the following: The latest legislation gives the EIDL a nice advantage for 2021 – the $10,000 is no longer considered taxable income and business owners won`t have to deduct the amount from their PPP loan forgiveness applications (as they had to do in 2020).

The 2021 minimum wage for exempt workers in Alaska is $827.20 per week, double the new minimum hourly wage. The U.S. government ended 2020 with the Continuing Appropriations Act of 2021, which provides additional financial relief to small businesses after the first round of PPP loans expires in August. The bill includes more than $284 billion for loans from the U.S. Small Business Association (SBA). establishes the COVID-19 Emergency Small Business Protection Act, 2021; concerns deportation proceedings (Part A); concerns enforcement procedures (subsection A); refers to taxed sales (Subsection B). (learn more) prepares statements of difficulty for owners of commercial real estate (subsection C) (part B). As you can imagine, this paid leave will cost a reasonable amount and Connecticut employers will have to make quarterly payroll deductions to fund the program starting January 1, 2021.

The deductions aren`t huge — they`re capped at 0.5 percent, similar to Social Security deductions. Some states have made special increases in 2021 with timelines for further increases over the next few years. Others adjust their minimum wage every year. 2021 will be a tough year for small businesses recovering from 2020 losses. For businesses in low-income and minority communities, access to adequate credit may be more difficult. The federal government has provided $12 billion to finance these businesses, called community development financial institutions, through loans and even grants. Any PPP loan given does not count as taxable income, which is a great relief for businesses and a departure from the usual procedure for the IRS. As a responsible small business owner, you`re probably way ahead of me in this case. Minimum wage information can help you plan a long-term financial strategy as inflation rises. Some states such as California, Connecticut, Illinois, Maryland, Massachusetts, Michigan, New Jersey and Oregon have implemented planned increases for 2022, 2023 and beyond. Michigan`s forecast goes all the way to 2030. It remains to be seen whether the pandemic and the economic crash will affect these numbers.

For now, plan to pay your workers at least the 2021 minimum in your state. Colorado`s 2021 updates require employers with 16 or more employees to offer one hour of paid sick leave per 30 hours worked (up to 48 hours per year) and additional paid leave as needed in the event of a public health emergency. Starting at 1. From January 2021, companies will no longer be required to provide EFMLA or PSLA leave. However, they can voluntarily offer this leave if an employee needs it, and until March 31, 2021, they can still receive a federal tax credit for it. However, if the state`s overtime laws set a higher maximum wage limit for overtime pay, workers in that state are entitled to the higher rate. Seven states — Alaska, California, Colorado, Maine, New York, Pennsylvania and Washington — automatically raised that limit when they raised the minimum wage in the new year. If you have prepared your tax return for 2021, you may have planned not to deduct RAP expenses or to defer filing the return altogether to avoid a tax increase. In addition to federal regulations, individual states also have laws that business owners must follow. The following links will take you to more information about state laws and state labor law contacts. Refers to the approval of tax-efficient savings accounts for small businesses This program is also funded by payroll deductions, which are set at 0.75% annually in 2021.

To qualify for loan forgiveness, businesses must spend at least 60% of their loan on labor costs during a certain loan forgiveness period – between 8 and 24 weeks (which can start and end whenever you want). How you do this depends on your needs and industry. Some companies may choose to reduce or eliminate employee overtime. Others might raise wages so that employees who were in the “hourly/non-exempt” range — anyone earning less than the minimum wage in your state — earn enough to join the compensation level. The IRS has received many questions about tax laws for PPP loans, and the Dec. 20 legislation has provided clarification, although there may be other changes before tax season. Bankruptcy isn`t everyone`s first choice, but the Small Business Reorganization Act makes the Chapter 11 filing process more manageable. The changes are intended to increase control for business owners and reduce creditor control over the process. You and your appointed trustee choose your recovery plan and save money on registration fees. The Brookings Institution estimates that the law will help up to 70% of small business owners who are bankrupt as a result of the pandemic. This website provides general information on some of the laws administered by WHD and DOL, as well as other useful federal resources that often apply to new and small businesses. In addition to dramatic changes in the global economy, the new year has brought important new rules for businesses in the United States.

If you`re a business owner, you`re probably used to keeping an eye on the regulations that apply to your industry. Small business owners often take on a lot of debt when they start out. And as the coronavirus pandemic wreaks havoc on the economy, more and more businesses are likely to join them. Some owners will consider the possibility of bankruptcy. Six states — California, Colorado, Connecticut, Maine, Massachusetts and New York — have passed laws giving employees broader access to paid family and sick leave. Unless otherwise stated, each law comes into force on January 1, 2021. Previous PPP recipients are eligible if their business employs 300 people or less and experienced a decrease in gross revenue of at least 25% in 2020. The funds will also be allocated to very small businesses (10 employees or less), certain self-employed and independent contractors, food service establishments and not-for-profit organizations, among others. For many employees, the new laws mean higher compensation and bargaining potential. If your state has raised its minimum wage and your employer doesn`t pay you at least that rate, look for a job that does. Similarly, if you`re new to overtime pay, make sure you get it – carefully document your hours. Each state legislature drafts its own paid leave laws, but there`s a detailed overview at the Littler Workplace Policy Institute.

Codify a target of 25% small businesses for public procurement and improve the capacity of public authorities to include underserved small businesses in public procurement. This process, which is usually lengthy and expensive, has become faster and more efficient. Among other benefits, the law allows debtors to retain control of their businesses in order to “reorganize” and reopen as quickly as possible financially.