The Affordable Care Act (ACA) is forcing small business owners across the country to rethink their tax savings strategy. New regulations and penalties mean that every small business owner – from one-person shops to recently defined Applicable Large Employers (ALEs) – should work with a tax consultant who is knowledgeable on the full scope of the law. This is the best way to realize the most tax savings and avoid costly penalties.Here’s why.
The ACA Is Complicated
The ACA is littered with mandates, regulations, timelines and exceptions. As a small business owner, you have to understand a wide range of factors, including your employee full-time equivalent (FTE) status, acceptable and affordable plans for employees and more.
Work with a tax consultant who is able to help you navigate the ACA. Make sure your tax consultant truly understands the law and has small business experience. Otherwise, he or she may provide you with incorrect advice, as many exceptions and specific rules apply to small businesses.
Additionally, the ACA has different provisions for businesses and individuals. If your tax consultant is more familiar with one type of provision than the other, this person might steer you in the wrong direction.
The ACA Is Difficult To Self-Manage
Naturally, it may be tempting to learn the ACA’s rules and regulations and then adjust your tax savings strategy yourself. While this might be a lower-cost solution in the short term, the law’s complex nature makes it safer and less risky to work with a qualified, knowledgeable professional.
For example, you might believe that you are exempt from ACA provisions because you have less than 50 employees. But, if you’re not accurately calculating your FTE number – or if you’re offering to provide a stipend for employees to purchase their own plan – you are at risk for penalization.
When thinking about tax savings, don’t choose the short-term solution. Work with an experienced tax consultant who makes the ACA a priority instead of an afterthought.
The ACA Requires Year-Round Attention
To further ensure that you’re staying compliant, consider your business structure year-round. If the size of your business changes or a new mandate goes into effect, you need to know immediately, or you risk incurring a penalty and taking a large financial hit.
There’s also a difference between the ACA as it’s written and the ACA as it’s being enforced. You need to dedicate time and resources to stay on top of changes as they happen in order to avoid complications. Working with an ACA expert represents a valuable investment for your small business. A knowledgeable tax consultant monitors legal changes year-round and adjusts your annual tax strategy and planning to accommodate a shifting landscape.
If you’re a small business owner attempting to navigate the ACA and factor it into your annual tax planning, make the prudent choice and work with a qualified tax consultant. The risks and potential consequences of noncompliance are too high for self-management.