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In the business world, it is essential to be aware of the regulations that affect small businesses. These regulations can be a double-edged sword, since they seek to improve commercial transactions, discourage unfair or illegal commercial activities, and protect workers. However, for small business owners, they often mean higher costs and possible penalties for not complying with them. In this sense, it is crucial to understand the regulations that will come into force in 2024 and how they will impact small businesses.
As we approach 2024, small business owners face critical regulatory changes. Let’s delve into the key points:
Registering with FinCEN
Small businesses must register with the Financial Crimes Enforcement Network (FinCEN) in 2024. This requirement stems from the Corporate Transparency Act passed in 2021. The act aims to expose shell companies and prevent illicit actors from hiding their identities and laundering money through the financial system. While exemptions apply to businesses with over 20 employees and more than $5 million in sales, approximately 32 million small businesses remain subject to registration. Owners and part-owners must provide personal information, including a photo ID and home address. Despite legal challenges, the regulation takes effect in 2024, with extended deadlines for existing businesses.
Relief from Reporting Digital Transactions
The Internal Revenue Service (IRS) has granted a reprieve regarding reporting digital transactions. Payments exceeding $600 via third-party providers (such as Venmo, Zelle, and online marketplaces) won’t require reporting for the 2023 tax year. In 2024, the IRS plans to implement a $5,000 threshold for reporting, easing the burden on businesses.
New Reporting Requirement for Small Business Loans
To enhance transparency and combat discrimination, the Consumer Financial Protection Bureau (CFPB) now mandates that banks report the demographics and income of small business loan applicants. This initiative aims to create a database like what exists in the mortgage industry. By collecting data on race, geography, loan approvals, and interest rates, regulators can identify potential redlining practices.
Small Business Lending and Compliance
Small business advocacy organizations express concerns about new requirements that may hinder loan processes, making it even more challenging for small businesses to secure loans. These regulations involve extensive paperwork, increased litigation risks, and privacy concerns. Additionally, they could potentially drive small banks out of business and limit competition in the financial lending sector. The Small Business & Entrepreneurship Council’s president and CEO, Karen Kerrigan, highlights these issues.
National Labor Relations Board (NLRB) Joint-Employer Rule
In October, the NLRB expanded the definition of a “joint employer.” This rule applies to labor relations and holds two companies jointly liable for decisions related to employees. While unions and workers’ groups view this as beneficial for worker protection, small business advocacy groups find it burdensome. The effective date of this rule has been extended to February 26, 2024, due to ongoing legal challenges.
Minimum Wage Increases
Over 20 states plan to raise their minimum wage in 2024. For instance, Nebraska’s minimum wage will increase by $1.50 to $12 on January 1, and Florida’s will rise by $1 to $13 on September 30.
Proposed Overtime Rule
The Department of Labor proposed a regulation that would allow 3.6 million additional workers to qualify for overtime pay. Salaried employees in executive, administrative, and professional roles making less than $1,059 per week (up from $35,568) could benefit. However, legal challenges are expected, given the potential impact on businesses.
In summary, being aware of the regulations that affect small businesses is essential to ensure their compliance and avoid possible sanctions. At Phoenix Pro Connect, a high-level recruitment and staffing company in South Florida with more than 25 years of experience in the market, we are committed to providing support to companies so that they can adapt to regulatory changes and continue to grow successfully in a constantly evolving business environment. Contact us for more information!
PHOENIX PRO CONNECT is a high-level recruitment and staffing company in South Florida with more than 25 years in the market.
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(1) What Small Businesses Need to Know About New Regulations Going Into 2024. https://www.usnews.com/news/business/articles/2023-12-13/what-small-businesses-need-to-know-about-new-regulations-going-into-2024.
(2) Chase Law Group. https://chaselawmb.com/2024-small-business-regulations/.
(3) 5 Regulations That May Impact Small Business in 2024. https://bofainstitute.cornell.edu/more/5-regulations-that-may-impact-small-business-in-2024/.
(4) 5 Regulations Set to Influence Small Businesses in 2024. https://amcredit.com/blog/navigating-change-5-regulations-set-to-influence-small-businesses-in-2024/.
(5) en.wikipedia.org. https://en.wikipedia.org/wiki/Small_business.