In our previous post, we discussed how minimum wage changes and overtime laws are going to affect your business in the new year. Now, let's move onto our next three Q&A for 2020!
The IRS has new W-4 forms in 2020.Â The changes have to do with the way tax is being withheld. It's more of an administrative headache than a huge cost, especially if you do payroll yourself.
This only applies to new employees. Your existing employees are not impacted. If you do hire a new employee, they will have to complete the new form. If you are using an automated payroll system, this change should be merely different paperwork. If you do payroll manually, then the IRS has complied a new calculator to figure out the right withholding.
A growing list, too long to enumerate, of states, counties, and cities have passed legislation prohibiting, restricting, or "taxing" plastic bag use. This is a trend that will likely continue.
Plastic bags are quickly going the way of the dinosaur. Not immediately, but I wouldn't plan on them having a long life. It's probably time to start to think about how to switch. It's also a potential upsell for branded portable tote bags. For now, they can be used, but expect to have to manage the additional cost via one of the methods mentioned above.
You may be thinking that "hey, California is a quirky state and has a number of weird laws that won't affect me". I'd caution that thinking. The labor laws that govern this area are from the 1930s. They are woefully out of date. California is likely the canary in the coal mine. California's AB5 law put strict limits on who can and cannot be considered an independent contractor. It will force companies, not only in California but also those who use contractors from California to decide whether or not to hire these people as part-time employees or face fines and court challenges.
California is not the only state acting. There is legislation is pending in both New York and New Jersey. We've discussed the proper classification of workers in a number of posts like "We Use Gig Workers, Why You Should Too" and "A Simple Way to Classify Workers in Small Business". It's our opinion that this is just the tip of the iceberg. We strongly encourage you to take action now, especially if you are in a ˜blue" state. Even in the "red" states, I don't think this model can last forever. States are losing too much money in payroll taxes: unemployment, disability, etc. to allow this to continue. When a state is strapped for cash, I'd expect that this will be one place they look for revenue.
There are a number of big changes that hit 2020. If you haven't taken action to manage them, now is the time. And if there are more Q&As you have for us, ask! We would love to make another update for this post in the future as well.
Brian Cairns, CEO of Prostrategix Consulting. Over 25 years of business experience as a corporate executive, entrepreneur, and small business owner. For more information, please visit my LinkedIn profile