Opinions expressed by Entrepreneur contributors are their very own.
Donald Trump would be the nation’s 47th president in January. He comes with lots of baggage, and there are numerous the explanation why folks did not vote for him. This column will not be about that.
That is about business. When you think about a second Trump administration purely primarily based on how he would affect companies on this nation, it is fairly clear that it will likely be good. My enterprise — a expertise consulting agency specializing in buyer relationship administration — will significantly see constructive results.
I am sensible. I perceive that President Trump will not be going to create new customers or innovate new merchandise for me. He isn’t going to unravel the extreme labor shortages that make it tough for me to seek out and retain good talent. A second Trump administration cannot magically wave a wand and repair future inflation or drive down rates of interest. He isn’t going to handle my enterprise, accumulate my receivables or pay my payments. Nevertheless, the Trump administration will affect my enterprise in three important methods.
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1. Taxes
For starters, my tax invoice is not going to be going up. It might truly come down.
The most important deduction that may seemingly not go away is the Qualified Business Income Tax deduction for pass-through entities like S-corporations and partnerships. My firm is an S-corporation. This yr, I get a 20% deduction on my enterprise’s earnings earlier than it passes by way of to my particular person return. This deduction, which was enacted by the primary Trump administration in 2017, is ready to retire on the finish of 2025.
Many small business owners have additionally loved a $29,200 normal deduction on their collectively filed particular person tax returns. Nevertheless, that deduction will probably be cut in half after 2025.
Important deductions that allowed us to depreciate the first-year price of buying capital gear had been diminished and confronted additional limitations this yr. A lot of my purchasers who as soon as deducted analysis and improvement bills of their first yr have been compelled to amortize these funds over longer durations due to expiring guidelines.
Tax charges in 2025 in comparison with 2017 would have elevated. Capital good points charges would have gone up. Earners making greater than $400,000 yearly would’ve seemingly had new taxes imposed.
General, taxes would have gone up for small enterprise house owners like me had Kamala Harris been elected. Now, because of Trump’s intent to increase or make everlasting the 2017 Tax Cuts and Job Act with GOP majorities seemingly in each the Home and Senate, they will not.
2. Office rules
Beneath the Biden administration, many authorities businesses have been inspired to concern new rules, starting from helping unions set up extra simply to banning non-compete agreements. Nevertheless, three rules have had a selected affect on my firm.
Due to new worker classification rules finalized earlier this yr, it is now tougher for me to make use of unbiased contractors. My enterprise depends on freelancers to do improvement and coaching for our purchasers. We bill for his or her companies. Our contractors receives a commission properly and revel in their flexibility. However now, I could also be compelled to reclassify these unbiased employees as workers as a result of the companies they carry out for my enterprise are “integral” beneath the brand new definitions. Doing so means I’ve to pay employer taxes, supply extra employee protections and doubtlessly open up my profit plans — like medical health insurance — for them. My contractors have by no means requested for this, however now I could also be compelled to do it anyway.
For my workers, additional time pay goes up. Beginning in January 2025, new rules from the Division of Labor will make employees making lower than $58,656 per yr eligible for additional time pay, up from $35,568 firstly of this yr. Which means my salaried employees who meet different necessities will probably be entitled to additional time pay in the event that they work greater than 40 hours per week. My firm’s versatile PTO plan mitigated the duty to pay additional time in any given week as a result of an worker could resolve to work fewer hours another time. However this rule will problem that technique and certain enhance my compensation prices.
Lastly, the Equal Employment Alternative Fee issued new rules earlier this yr that make employers like me responsible for the conduct of our workers each out and in of the workplace and after they’re taking part in on-line calls. For instance, if colleagues bully an LGBTQ+ worker at a non-company occasion at a bar on a Saturday evening, they could really feel that their work atmosphere is hostile, and until I do not learn about it, I am accountable. One other employee on a Zoom name with a vendor could also be uncomfortable a few e-book on a bookshelf behind them. Once more, I am accountable because the employer for making a non-hostile atmosphere. To deal with these issues, I have to pay labor attorneys, trainers and a tech firm to arrange a reporting system.
What do all three of those rules have in frequent? They don’t seem to be legislation. They’re interpretations of the legislation by authorities businesses. There are lawsuits difficult these guidelines. The Biden administration is responding to those fits. A Trump administration is not going to, which suggests the foundations will both be reversed or not enforced. President Trump will seemingly not fill the EEOC management positions as they expire over the subsequent 4 years, leaving that company toothless and giving me — and lots of small companies — some reduction.
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3. Enterprise atmosphere
True story: A buddy who works within the finance division of a big, publicly held firm confided to me this week that his firm had two budgets ready primarily based on the election end result. If Harris had gained, the price range would have been “defensive.” Trump’s price range is “enlargement.” To me, that claims all of it.
If a president impacts the economic system, it is extra intangible than tangible. When rhetoric from the very best authorities places of work is accusatory, offensive or disapproving in opposition to enterprise, most companies circle the wagons. When those self same political leaders cross guidelines and rules focusing on corporations, these corporations need to pay for these rules, which takes away funding for his or her development. And when leaders level their fingers at “large companies” and the “rich,” they threat these entities pulling again on investing, hiring and spending.
However the reverse is true when there is a pro-business president in workplace. The latest inventory market rise is proof of that. So is the “enlargement” price range at my buddy’s firm. The reason being apparent: Folks journey bikes when it is sunny; they keep inside when it is raining. Companies — and the tens of millions of workers who work for them — take extra dangers and revel in extra rewards after they know they do not have to fret concerning the authorities interfering with their operations. You may’t quantify this profit. However you understand it is there. Because of this small business confidence was greater in the course of the first Trump administration than in the course of the Biden administration.
My firm sells gross sales and advertising and marketing software program. It is a discretionary funding — one which my purchasers make after they really feel assured sufficient sooner or later to spend money on technology that may assist their companies develop. Given the extra favorable enterprise local weather, I count on many will begin opening their pocketbooks to make this funding.
In fact, there will probably be challenges beneath the Trump administration. And there is nonetheless lots of uncertainty. Many economists have warned concerning the adverse affect of the tariffs he plans to oppose. Others are very involved with the deficits his insurance policies could create. Some industries — significantly ones that depend on authorities contracts or chip-making, in addition to environmental, academic and authorities service initiatives, will seemingly endure. Others will profit. There will probably be winners and losers beneath this administration. However for my enterprise specifically? It is a win.
