As we head into 2025, small businesses should be aware of several key changes that could impact their operations and bottom line. One of the most significant shifts will be the arrival of a new administration in Washington, which is expected to be more business-friendly than the previous one. However, there are other important updates to keep an eye on as well.
Several states will be implementing changes to their overtime and minimum wage rules in the coming year. Alaska, California, Colorado, Maine, New York, and Washington are among the states that will see their overtime thresholds increase, with Alaska’s rising from $48,796.80 in 2024 to $54,080 on July 1, 2025. Additionally, 23 states and 65 cities and counties have minimum wage increases set to take effect in 2025.
Business owners like Rich Kingly, CEO of Driveway King in Garwood, N.J., are already preparing for the impact of these changes. “As we operate in multiple states, staying compliant with each state’s rules and regulations is an ongoing challenge,” Kingly said. “Minimum wage increases add financial pressure, especially with fluctuating material costs and competitive pricing.”
Another important change to be aware of is the delayed federal FinCEN registration requirement.
This new rule, part of the Corporate Transparency Act, will require millions of small businesses to register with the Financial Crimes Enforcement Network by Jan.
Small businesses adapt to regulation changes
1 and provide personal information such as a photo ID and home address.
Small business groups have argued that the regulation is too onerous, and non-compliance could result in fines up to $10,000. However, businesses with more than 20 employees and over $5 million in sales may qualify for exemptions. New regulations on taxes for payments via third-party apps like PayPal, Cash App, and Venmo are also set to take effect in 2025.
Previously, the threshold for reporting earnings from these apps was $20,000 and 200 transactions, but the American Rescue Act lowered it to $600 with no transaction minimum. For 2024, the new requirement necessitates paying taxes on anything over $5,000 as part of a phase-in to implement the $600 reporting threshold. Finally, inflation remains a wildcard for the coming year.
While it has retreated from its peak of 7.2% in June 2022, the Federal Reserve’s recent projection raised the inflation rate for 2025 to 2.5%, up from the earlier estimate of 2.1%. Sticky inflation and high rates could mean significant challenges for small businesses, despite potential policy moves to stimulate growth. “What we’ve seen for the past two-and-a-half years is that inflation is the top concern for small business,” said Tom Sullivan, vice president of small business policy at the U.S. Chamber of Commerce.
“There is a significant question on whether the incoming president’s policies will bring inflation down.”
As small businesses navigate these changes in 2025, staying informed and proactive will be key to remaining compliant and mitigating financial pressures.
