Alternative financing solutions including invoice factoring can assist small businesses who are facing the new health care reform law costs even as the complete health care reform law will not be fully implemented until the year 2018. Although many small business owners will feel the impact almost immediately, some self-employed people and small employers won't see any effects for a few years.
The way it is working is that during the remaining year of 2010 businesses with fewer than 26 employees and with average annual wages of less than $50,000 who pay more than half of their employees' health benefits will be able to claim a tax credit of up to 35 percent of the cost of premiums. Self-employed individuals with medical conditions will be able to buy insurance at reduced rates.
By the year 2011, companies with fewer than 100 employees will be eligible for grants to set up wellness programs. Employers will be able to offer bonuses of up to 30 percent of the cost of insurance to workers. They will also be required to disclose the value of health-care benefits on workers' W-2 forms, and by the year 2018, those employees with the most expensive plans will have to pay taxes on the benefits.
Then by the year 2013, wealthy Americans will see Medicare taxes rise to 2.35 percent, up from 1.45 percent, on earnings over $200,000 for individuals, and $250,000 for couples who are married. Tax-exempt contributions to flexible spending accounts for medical expenses will be limited to $2,500 per year. Plus, employers' tax deductions for the cost of a retired person’s Medicare drug benefits will be eliminated altogether.
All U.S. citizens or any legal resident must have insurance by the 2014, and individuals and small businesses with up to 100 employees will be able to shop for coverage in what will be known as health exchanges. This is the year that will mark the time when insurers will be barred from rejecting anyone with a pre-existing condition. And finally, companies with 50-plus employees that don't offer insurance could face penalties of $2,000 per uncovered worker.
“For the majority of small businesses in the U.S., costs will go up in order to meet the new insurance coverage requirements,” said George Shapiro, chief executive officer of The Interface Financial Group. “One way for small businesses to be prepared to cover these costs and avoid penalties, is to begin a program of accounts receivable factoring.”
The economic circumstances during the last year has been very tough for small business owners, so these times call for creative solutions like invoice factoring to help a small business run smoothly. In order to sustain and grow, businesses need some cash on hand. When outstanding invoices stack up, single invoice factoring, also known as spot factoring, is one tactic that many companies have discovered can help them get by.
Invoice factoring, or spot factoring, enables companies to get short-term working capital and improve cash flow and grow their businesses. Since most companies don't get paid immediately for delivered products or services, factoring benefits businesses that do not get paid for 30, 60 or 90 days by advancing up to 90 percent against the company's invoices.
An invoice factoring company purchases selected invoices at a discount. Factoring companies first typically look at the creditworthiness of the client's customers, and they do not expect to buy 100 percent of a company's receivables, so there are no minimum or maximum sales volume requirements.
This article was added on Tuesday 01 June, 2010.
