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Emerging Companies and Start-ups

Five Legislative Reforms That May Impact Local Businesses

Legislation pending in Congress could have a substantial impact on business owners and it is important for local businesses to be aware of these potential changes. Some of these potential changes include:

 1. Marketplace Fairness Act – Online Sales Tax

This Act requires Internet retailers to take responsibility for collecting sales tax from each customer and remitting that tax to the appropriate jurisdiction. The legislation would apply to online retailers with more than $1 million in annual out-of-state sales. The Senate passed the Marketplace Fairness Act on May 6, 2013, and now the bill will likely face greater opposition as it meanders through the House of Representatives. Many of the critics of this legislation question the practicality of a retailer being subject to the sales tax laws of potentially thousands of local jurisdictions. For online retailers, this legislation could substantially change the operating procedures of businesses and expose business owners to greater regulatory oversight and litigation risk if taxes are not remitted properly to local jurisdictions.

 2. The Affordable Care Act

On January 1, 2014, the practical implications of the Affordable Care Act will take effect mandating businesses with fifty or more employees to provide health insurance to full time employees or face penalties. Small businesses will have the opportunity to participate in health care exchanges and to purchase insurance coverage for their employees. Businesses will be subject to new reporting requirements under the Affordable Care Act. For additional details on this legislation, go to Business Preparation for Provisions of the Affordable Care Act Effective in 2014.

 3. Budget Reform

Senators, Representatives, and the President have proposed a range of budget proposals from conservative plans to extreme spending cuts. For example, Senator Murray proposed cutting spending by $837 billion over ten years and pairing such cuts with $923 billion in tax revenue. The President’s plan cuts spending by $1.2 trillion over ten years, but his plan only asks for $583 billion in new taxes, while Representative Ryan advocated cutting spending by $5.7 trillion over the next decade. Budget reform is always controversial, so it may require the next debt ceiling battle to pass crucial legislation. Businesses should be aware of the new taxes proposed in each of the budget reforms.

 4. Immigration Reform

At the center of possible immigration reforms are guest worker programs that could substantially impact small businesses. A new proposed bill would put undocumented immigrants on a 13-year path to citizenship. Other proposed reforms may allow businesses to permanently hire individuals with special skills. There are numerous proposed changes that could have a substantial impact on labor costs and regulatory oversight. Thus, business owners should carefully monitor the proposed changes to immigration policies.

 5. Jumpstart Our Business Startups (JOBS) Act – Crowdfunding for Local Businesses

In March 2012, Congress passed the Jumpstart Our Business Startups Act, which enables small businesses to use the Internet to generate up to $1 million in small investments. The legislation was sent to the Securities and Exchange Commission for finalization of the rules. The final regulations have not been decided, and the recent change in SEC leadership will likely have an impact on the rules released. When the rules are released, entrepreneurs and small business owners will have an excellent opportunity to finance their business ventures.

 These are just a few highlights of pending and enacted legislation that may have a substantial impact on your business. It is critical for businesses to stay aware of these important changes so that owners can ensure monetary reserves and staff are in place to handle the new legislative and regulatory requirements facing their business.

Allen & Gooch is providing this legal update for informational purposes only. This article should not be construed as legal advice or a legal opinion as to any specific facts or circumstances. You should consult your own attorney concerning your particular situation and any specific legal questions you may have.