The Green Sheet Online Edition

March 27, 2023 • Issue 23:03:02

Seven new rules for SMBs in 2023

By Allen Kopelman
Nationwide Payment Systems Inc.

When you see a law you don't like, ask yourself what you did about it before it was voted into law. Did you participate in the Request for Comment period? Did you contact your senator or state representative and explain why the law could be harmful to your business, industry and economy in general? It's easier to challenge a proposed law than an official rule.

Through the years, payments leaders, including yours truly, have been vocal about laws they deem unfair, restrictive or potentially harmful to our industry. Trade associations organize Washington D.C. fly-ins and respond to legislative requests for comment. Merchants collectively stand up to policymakers, making sure their voices are heard. Considering the economic headwinds we're facing, we need your support.

In Episode 142 of the B2B Vault podcast, "7 New Rules for Small Business in 2023," we discussed why business owners need to take these matters seriously. The following rules are in play and could adversely impact your business, if passed:

1. 1099 classifications: This law, which stipulates how independent contractors–1099 will be classified, could disrupt many businesses. New classifications for independent and gig workers are already an issue in California under AB 5, and the federal government is following suit. For details, visit https://bit.ly/42mpyeZ.
2. SBA lender network expansion: This hot mess began during COVID, when public and private sectors rapidly innovated to help business owners get much-needed working capital and were often exploited by fraudsters. Now there are lawsuits and new rules. Fintech lenders must be held accountable, and the government needs to do better with controlling fraud.
3. Banning non-compete agreements: The Federal Trade Commission is proposing broadly banning non-compete agreements, which could encompass non-disclosures and more. Let's hope this ends the nonsense about stopping people from working in an industry. Bottom line: business owners need their secrets and customers protected.
4. Business ownership disclosures: The Treasury Department's rule would require detailed business ownership information, which could cause issues in Delaware, Wyoming and Nevada, and a few other states that don't disclose ownership on publicly available corporate documents. The exemptions puzzle me: companies with 20 or more employees or $5 million in revenue don't have to comply. That's just wrong. FinCEN and the IRS want to know who owns these small companies. Another attack on small business owners.
5. Immigration services fee for businesses: This rule raises the fee from $40 to $50 up to $1,000 to bring workers into the United States. I like that. With the massive layoffs in the tech sector, many willing and able U.S. workers need jobs, and foreign workers will have to go home within 60 to 90 days without jobs unless they find new employment.
6. Tougher rules, regulations on fund managers, venture funds: Let's not fight this. It's designed to protect everyone from unscrupulous businesses and ensure we don't have another FTX nightmare. This is also why the SBA needs better controls.
7. Reprieve on payment network transaction requirements from IRS: Passing the rule about reporting $600 or more on 1099 K from Venmo, PayPal, Zelle, cash app, etc., has been delayed. The rule about reporting $20,000 or 200 transactions cumulatively across all payment types is still on track. The IRS will try to figure this out by the end of 2023. Meanwhile, many P2P service providers are requiring people to turn their accounts into business accounts.

Your vote counts

Every time a new payment solution or fintech product launches, regulators promulgate new guidelines designed to protect consumer and merchant privacy, security and best interests. It takes time, however, for guidelines to become law. As proposed bills make their way through the Senate and the House of Representatives, every vote counts.

While not all of these rules will become law, they reflect changing attitudes on Capitol Hill, and changes are coming quickly. It's time for all business owners to be proactive and add our comments and concerns to the public record. Let's work together to craft sustainable, economically sound, business-friendly policies.

Allen Kopelman, a serial entrepreneur, is co-founder and CEO of Nationwide Payment Systems Inc. and host of B2B Vault: The Payment Technology podcast. Email him at allen@npsbank.com and connect on LinkedIn www.linkedin.com/in/allenkopelman and Twitter@AllenKopelman.

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