New changes in 2022 for small businesses
As the new year begins, new laws are taking effect that impact small businesses. Please see below for a compilation of recent changes that may affect your small business in 2022.
New reporting threshold for small business transactions
If you are paid via third-party services such as PayPal or Venmo, or through platforms like eBay, Uber or Etsy, there are new changes to the rules affecting when that provider must report your earnings via Form 1099-K to the Internal Revenue Service. The American Rescue Plan Act of 2021 significantly modified the reporting threshold associated with these transactions, from $20,000 in total payments and 200 transactions in a given year, to a threshold of $600 in total payments (with no minimum transaction required). So, if you make $600 in a year, that information will be provided to the IRS.
This rule is effective as of January 1, 2022 and impacts all payment transactions to small businesses and self-employed individuals who use third-party payment networks such as PayPal, Venmo, Zelle, Cash App, Amazon, Etsy, eBay, or any other third-party payment networks.
Note that only transactions considered as “goods or services” over the $600 threshold will immediately produce a 1099-K form to report on your taxes. As a result, personal gifts, charitable contributions and reimbursements are not included.
New minimum wage increases
Effective January 1, 2022 (and December 31, 2021 in New York), more than 20 states across the country increased their minimum wage, while 35 cities and counties also increased their wages to meet or exceed $15 for some or all employees. More states and jurisdictions are also increasing their minimum wages throughout 2022. Learn more here.
Updates on government relief programs
SBA’s EIDL Program
The U.S. Small Business Administration’s Economic Injury Disaster Loan program expired on December 31, 2021 and is no longer accepting new loan applications or advances. However, the SBA will continue to accept and review appeal requests for loan applications received on or before December 31, depending on whether the appeal was received within the timeframes of the regulation. This means six months from the date of decline for reconsiderations and 30 days from the date of reconsideration decline for appeals, unless funding is no longer available.
Additionally, borrowers can also request increases up to their maximum eligible loan amount for up to two years after their loan origination date, or until the funds are exhausted, whichever happens first.
Employee Retention Tax Credit
The Employee Retention Tax Credit officially expired in Q3 of 2021 (September 30, 2021). However, small businesses can retroactively claim the credit until 2024. To learn more about what periods were covered under the ERTC, visit our guidelines here.