Well, health care reform, or at least the Patient Protection and Affordable Care Act, is now the law of the land. And, what ever your personal feelings about this legislation, as a business owner or manager you need to prepare for the impact. We’re not accountants at UPi, and, like you, we are consulting with ours to understand the tax implications of this legislation.

What we do understand is that small and mid-size businesses are going to need to more closely consider the impact of their operating decisions and practices on their tax situation and federal liabilities. Adding that 51st employee or keeping them, is now more than just a simple hiring/firing decision. Similarly, if you are under 25 employees with average wages below $50,000 you’ll need to consider the benefits of new tax credits vs. the benefits of adding the next employee or offering raises to your employees. Again, your accountants will need to be involved.

If you go over 50 employees, you not only are subject to either providing health care benefits with a at least a 50% company contribution, you are also subject to rules regarding the % of wages an individual employee is forced to contribute and possibly penalties if certain employees opt out of your plan and join one of the Exchanges in order to obtain federal subsidies. You will be faced with possibly higher benefit costs, taxes and fines, and a new administrative burden to just try and keep track of it all.

Beyond the accounting implications, there have always been some good reasons to focus on productivity and headcount. Now, we have added some legislative cliffs so it would be wise to avoid falling off one of them.

Therefore, if you are below the magic 50 employee number (or 25 and want to get the new tax credits) and want to stay there but still grow your business, you need to find and adopt strategies and technologies that increase the productivity of your existing head count.

Fortunately there are a variety of areas you can explore:

• Automation with technology
• Outsourcing non-core functions
• Business process streamlining
• Organization changes
• Go to market strategies

Further automation of operations and administrative functions is almost always possible as technology moves on. If you’re still using checks to pay vendors, look into EFT (electronic funds transfer) through your bank or accounting software. Similarly, encourage your customers to pay you by EFT. You’ll get the money in the bank faster and eliminate the labor associated with processing a written check.
If you’re a distributor, new racking, scanners, load management software, or other automation may improve operations in the warehouse reducing costs and labor. For sales and service functions, investigate leveraging the power of smart phones and other handheld devices.