Six Things I’m Talking to My Small Business Clients About at Year-End (Part 2)

This is a continuation of my rundown of the things I’m discussing with clients as we reach the end of 2013.


Four: The Affordable Care Act Won’t Require All Small Businesses to Offer Health Insurance to Employees

Only employers who have 50 or more “full-time equivalent” employees are required to offer health insurance. A full-time equivalent employee is someone who works 30 or more hours a week. If your total employee count is pushing towards 50, you should talk to your accountant and your insurance person for more details.

The typical small business with less than 50 employees isn’t required to offer insurance.

Five: But the Affordable Care Act WILL Affect All of Us in Some Way

Your business might not be directly affected by the Affordable Care Act, but all of us will be affected by the ACA in some way in 2014. It’s impossible to adequately summarize everything in one short paragraph, but examples include: the requirement that all individuals maintain health insurance, and surtaxes on wages and investment income if total income is above certain levels.

Six: Timing of major purchases

Accountants tend to throw out one universal piece of advice this time of year: buy assets, supplies, etc. before December 31 to reduce your tax liability this year. I’m not one of those accountants who just tosses this out as universal advice, because it may or may not be a good idea.

Stuffing as many purchases as possible into 2013 makes sense if you think your income is going to be higher in 2013 than in 2014. But if you think your income will be higher in 2014, it probably makes sense to wait until 2014 to make those purchases, so you can take the deduction when your income is higher.

Also, it’s poor planning to buy “things” just for the sake of getting a tax deduction. The deduction is nice, but if you don’t have a clear business purpose for making a purchase, then you’re wasting your money.