Obamacare, Your Business and Working Capital Loans
If you own a small business or are planning to start one, you probably already know that the costs of start-up and working capital are immensely complex. If you’re someone in a commercial industry, you probably already know that you have to spend the most on labor – because your people are your most important assets. And if you’re someone who hasn’t been living under a rock, you probably already know that Obamacare’s provisions on mandatory health insurance can force your costs to rise to the skies and your business to potentially hit rock bottom. While panicking is understandable, it shouldn’t stop your business development. Knowing the nitty-gritty of the Obamacare provisions is key to helping you know how to adjust your business and keep it alive.
If you don’t already know, Obamacare (formally known as the Affordable Care Act) is basically a new law that mandates everyone to purchase insurance, and strictly regulates the liberties of insurance companies. Unless you are part of the insurance business, the latter is not much of a concern and has different implications. For the conventional small business, the first and most important implication of the Act is on your costs.
The reality is that the across-the-board mandate of insurance will ultimately fall on the hands of the employers. If the providing or subsidizing of health insurance becomes part of your employees’ compensation package it is of utmost importance that you manage your operating budget, especially if you want to keep your talented people and ultimately your business. There are a few ways to deal with the circumstance without having to close your business or resort to lay-offs.
Firstly, the law gives special tax cuts to small businesses – specifically businesses with fewer than 25 people employed full-time. By 2014, those tax cuts will amount to about fifty percent of your premium payments. Secondly, the law also requires state-based exchanges to make offer prices more affordable to individuals, and therefore to you, the employer. These mandatory exchanges will allow for costs to lower because the risk can be pooled at larger numbers.
However, you should be wise to know that you shouldn’t tighten your belts solely based on the room that the government provides. The tax cuts aren’t a hundred percent coverage, and mandatory insurance and the penalties that come along with it will still be there nagging. Also, even though the costs imposed by Obamacare to small businesses may be a new concept, the underlying implication of it is not equally new. In the most basic sense, the cost of providing mandatory insurance to your employees is ultimately still a form of working capital expenditures. These are the same costs you dealt with at the start of your business – the costs you need to incur to keep business operations going. So the proactive solution is the same solution that applied to your other working capital costs – working capital loans.
If your business survived this long despite having to deal with acquiring working capital, a new bump in the road shouldn’t be a problem. You can compare interest rates at banks for short-term loans, or resort to alternative financing companies. Alternative financing companies specialize in helping small businesses, so you’re assured you’re in expert hands. If you’re panicking about the situation, chances are they’re working on a solution already.
If you keep a level head and go beyond the new terminologies and provisions inherent in the Obamacare Act, you’ll find that this is nothing you haven’t dealt with before. With the right venues, you’ll realize that the costs imposed by the new Act aren’t as bad as they seem.
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