Small businesses employ approximately 47.5% of all workers in the United States, according to the Small Business Administration, Those of you who fall into this category will likely be facing payroll and tax changes in 2019. Here are some of the most important changes for you to be aware of.
1. Minimum Wage
The minimum wage is constantly changing, no matter what state you live in. You and your employees may be perfectly happy with the 2018 or previous rates, but you are required by law to meet your state’s minimum wage. For example, the minimum wage for Texas in 2019 is set by the Texas Workforce Commission and is currently $7.25 per hour. There are exceptions, but you should know them before attempting to circumvent this payrolls standard.
To find your state’s current minimum wage for 2019, click here.
2. 2019 Social Security Maximum Withholding
The Social Security Administration announced that its benefit amounts and the maximum withholding have changed for 2019. This amount is adjusted every year using a formula determined by cost of living increases. The latest bump is greater than usual for the last several years because the cost of living in recipients has increased in the amount of 2.8%.
Social Security tax is also a payroll tax paid by small businesses each year and is set using an inflation-based formula. The maximum benefit is the highest amount you may receive in Social Security each month and is based on past earnings and retirement age. Maximum withholding is the most that can be deducted from a worker’s pay for Social Security. In 2019, this amount was raised to $132,900 as opposed to $128,400 for 2018.
3. 2019 IRA Changes
Changes have also been made for qualified retirement plans with salary contributions such as 401(k)s and simple IRAs. These are also referred to as elective deferrals by employees. Non-profit organizations and government workers can also be offered 403(b), section 457(b), and other similar plans. The changes are bit complex. For example, the general elective deferral limits for employees of non-profit and governmental employers with an IRA was $19,000. For more rates, check out this guide from Prudential.
4. Labor Law Posters
Many businesses are required by law to display certain posters in the workplace regarding labor laws that change each year no matter how much you hate viewing or buying them. Business posters include but are not limited to:
- Minimum wage law.
- Federal and state labor laws.
- OSHA job safety and health.
- Employee rights.
- Sexual harassment policy.
- Child labor law.
- Workplace hazards.
5. FSA Changes
Flexible spending accounts are a way for workers to save and pay for their own medical expenses. Certain businesses offer these plans, and the limits for 2019 have changed. The limit for an FSA has increased to $2,700, which is up from $2,650 for 2018. The 2019 limit for an FSA for dependent care remains at $5,000, which is a fixed amount that is not adjusted each year due to inflation.
Payroll & Tax Changes in Houston
Be sure to contact us if your small business needs help keeping up with these or any other payroll and tax issues.