Consider the impact of lower interest rates on your 2020 budget (e.g., lower repayment costs on lines of credit). Whether there will be additional cuts remains to be seen. The Federal Reserve cut rates in September 2019 to a range of 1.75% to 2%, which was the second cut in three months. If you have a line of credit or anticipate the need to borrow money in the coming year, don’t overlook the continued increase in interest rates and build it into your budget. The bad news is that employers in some other states, such as New Jersey, face increases. The good news is that premium for employers in some states, such as California and Florida, could drop by as much as 5.4% (depending on the state). Consider the new Individual Coverage Health Reimbursement Arrangement (ICHRA) to enable employees to pay for their individually-obtained health coverage.Īnd workers compensation premiums may change. The 6% increase is related to large employers there are no stats for small businesses (anticipate that premiums increases will be greater for them). If you provide health insurance for your staff, expect to see premium increases of 5% or more. But payroll taxes will increase due to pay raises, as well as an increase in the Social Security wage base to a projected $136,800 (up from $132,900 in 2019) for companies with employees earning up to or more than this new amount. The percentage for Social Security and Medicare taxes (FICA) remains unchanged for 2020. As the owner, are you giving yourself a pay increase? Be sure to consider the impact of a greater payroll in 2020 on the amount of the qualified business income deduction (QBI) that you can take on your 2020 personal tax return. PayrollĪre you planning to give raises? The average pay increase for 2020 is projected to be 3.3% for non-management employees. In preparing your budget for 2020, be sure to consider the following projections: 1. As author and businessman Dave Ramsey has said: “A budget is telling your money where to go instead of wondering where it went.” This is an annual chore that should not be overlooked or delayed. Now that we’re in the fourth quarter of 2019, it’s time to craft your budget for the coming year. Heading into a new year? Make sure to plan to budget! (Credit: mohamed_hassan, Pixabay)
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