So Trump is President: What to Know for Your Small Business
Whether you’re for or against him, a Trump presidency means changes are coming. It’s still early in his presidency, but Donald Trump made many campaign promises that, if fulfilled, will have a large impact on small businesses. As a small business owner, it’s vital to be aware of these promises and to stay informed as these and other changes are made. While we can’t know for certain how small businesses will be impacted in the long run, here are some of the key changes you should have on your radar as you continue to run your business under President Trump.
Optimism Amongst Small Businesses
Trump’s historically low early-term approval ratings get a significant amount of press, but what you may not know is that small business optimism rose to the highest level since 2004 after the election results were announced. This is according to a December 2016 report by the National Federation of Independent Business (NFIB) on Small Business Economic Trends. In a nutshell, this report shows that small business owners expect the economy to improve, for sales to increase, and that the next several months will be a great time for expansion.
Now, optimism and sentiment isn’t a solid, tangible change per se, but it can directly contribute to it. As explained by the NFIB in their report, “expectations and sentiment can trigger substantial changes in “macroeconomic activity.” Basically, optimistic consumers will buy more and optimistic business owners will invest and hire more.
Balancing the Real Costs of Regulations
The impact of federal regulations on your business is going to vary wildly based on the type of business you’re in. Still, regulations - whether related to the environment or workplace safety - cost money. The National Small Business Association (NSBA) “found that the average small-business owner is spending at least $12,000 every year on regulations.”
In an effort to offset this regulatory burden, Trump has already released an executive order that basically says that for every small-business regulation made, two must be eliminated. Further, the Regulatory Accountability Act of 2017 has already passed the House.
Of course the cost associated with regulations isn’t everything. Without stating the obvious, there’s the whole matter of why the regulations were created in the first place. Regulations are in place to do things like keep our food and environment safe. Most people would agree that they don’t want lead in their children’s toys, but don’t forget that regulations protect you as a small-business owner also. For example, they help make sure that the products you import to help run your small business are also safe. Don’t imagine you’ll be in business long if you start selling toxic baby teethers.
So while you may see a drop in spending due to regulation cuts, don’t forget to plan for or to avoid the not so obvious things that could end up costing your business far more than the original regulations cost in the first place. Or as Elizabeth Warren points out:
“A lot of people think that regulations bring higher costs, but regulation is also about making sure that someone doesn’t get to beat out the competition because they’re dumping filth in the river or spewing poisons in the air.”
Trump has said that he will bring the corporate tax rate down from 35% to 15%. Further, he hopes to extend that tax rate to not only corporations but also to freelancers and business owners. So, as a small-business owner, you may be seeing some drastic cuts in your taxes under a Trump presidency.
But what is going to fund this tax cut?
One possible answer: a border adjustment tax, “which would only tax goods imported into and sold in the US” (The Guardian). So, as a small-business owner, you may see tax cuts, but if you rely on imported goods, you’re almost certainly also going to see an increase in your costs. In fact, small businesses are likely to be some of the hardest hit by such a tax considering that more than 95% of US importers are small businesses in wholesale or retail with 250 or fewer employees.
So, like with regulations, taxes aren’t so black and white. Once again, you need to balance the potential benefits against the potential downside - specifically in this case, the corporate/business tax savings against the increased costs.
We’re still only in the first few weeks of the Trump presidency, so we can only guess at the impact he will have on small businesses. With so much uncertainty it’s best to stay informed and stick to the adage of hoping for the best but preparing for the worst.
Pro tip: To offset potential unavoidable cost increases, take steps to minimize the costs you can control. One great example is to minimize overhead costs, which our team at Work Better can help you do via our extensive suite of services and amenities.