2025 Will Bring Change: Here’s What Small Businesses Should Know

Brace for impact, folks. For small businesses, 2025 is likely to bring significant shifts, many of them stemming from changes in Washington, D.C. The presidential election is ushering in an administration that might be more business-friendly, so small business owners should be aware of both federal and state-level changes that could impact their operations. These include changes to overtime and minimum wage laws at the state level, new tax reporting requirements, delayed federal regulations, and inflationary pressures. Let’s dive into those key areas small business owners should keep an eye on.

Inflation and Economic Policy

Inflation remains one of the top concerns for small businesses as 2025 approaches. Although inflation has eased since its peak in mid-2022, falling from 7.2 percent to 2.7 percent currently, it’s expected to remain volatile. The Federal Reserve also recently raised its inflation forecast for 2025 to 2.5 percent, up from 2.1 percent earlier in the year. The Fed is now projecting only two rate cuts for 2025, down from an earlier expectation of four. Stubbornly high inflation like this could translate to higher costs for customers and businesses.

The new administration’s policies will also play a significant role in shaping inflationary trends. Former President Trump has proposed tax cuts on various types of income, including Social Security benefits and overtime, along with a rollback of certain regulations—moves that could potentially boost economic growth. However, Trump’s threats to place new tariffs on imports and tighten immigration policies could drive up inflation further.

Changes at the Small Business Administration (SBA)

The Small Business Administration (SBA), which provides essential resources and disaster recovery assistance to small businesses, is set for leadership change. Former U.S. Senator Kelly Loeffler has been nominated by President-elect Trump to head the SBA, pending Senate confirmation. Loeffler, a strong Trump supporter, is expected to bring her own priorities to the agency, although specific plans for the SBA are not yet clear.

State-Level Changes to Overtime and Minimum Wage Laws

While a federal rule expanding overtime pay was blocked by a court in November, several states are moving ahead with changes to their overtime laws. For instance, six states—Alaska, California, Colorado, Maine, New York, and Washington—are raising their overtime pay thresholds.

Additionally, a total of 23 states and 65 cities and counties have planned minimum wage increases for 2025, effective either in January or later in the year—and this is welcome news to those who work in the industries impacted. However, small business owners operating in multiple states need to stay vigilant about these state-specific wage and overtime requirements, as non-compliance can lead to major penalties.

Delayed FinCEN Registration Requirement

As part of a broader anti-money laundering effort with the Corporate Transparency Act, a mandate that small businesses report certain ownership information to the Financial Crimes Enforcement Network (FinCEN) was introduced in 2021. This rule was originally set to go into effect on January 1, 2025, but it has been temporarily blocked in court. Should it go into effect, small business owners will need to provide personal information, such as a photo ID and home address, to FinCEN. Failure to comply could result in penalties of up to $10,000.

Latest Update: While deadlines for reporting were initially set for early 2025, recent updates have extended the filing deadline to March 21, 2025

Payment App Tax Reporting

Small businesses using third-party payment platforms like PayPal and Venmo will need to prepare for new tax reporting requirements. Under the American Rescue Plan, the reporting threshold for payments received through these apps was lowered from $20,000 and 200 transactions to $600, with no transaction minimum. Although this rule was delayed for two years, it will take effect for 2024 tax filings, requiring businesses to report any amount over $5,000 in payments received via these platforms. This is part of a phased approach to eventually implement the $600 threshold. Small businesses should make sure they’re properly tracking and reporting these payments to avoid potential fines or penalties. This shift in tax reporting could add complexity for businesses that rely on digital payment methods.

As 2025 unfolds, small business owners will face a mix of challenges and opportunities driven by inflation, regulatory changes, and shifting federal and state policies. Staying informed about changes in minimum wage and overtime rules, preparing for new tax reporting requirements, and keeping an eye on leadership changes at the SBA will be critical for small business success. And over at the Financial Pantry, we’ll be keeping tabs on it all. Cheers to a well-informed 2025!