5 Key Changes for Small Businesses in 2025
The start of 2025 ushers in significant changes for small businesses, driven by political shifts, regulatory updates, and economic trends. The incoming Trump administration, new state-level labor laws, updated federal financial regulations, and ongoing inflation concerns are reshaping the business arena. Here’s what small business owners need to keep on their radar.
1. Inflation and Economic Policy
Inflation remains a critical concern. Although it has eased from its 2022 peak, the Federal Reserve projects inflation to climb to 2.5% in 2025. Sticky inflation and higher interest rates could mean rising costs for both businesses and consumers.
The Trump administration's proposals, including tax cuts on Social Security benefits and overtime income, aim to stimulate growth. However, potential tariffs and stricter immigration policies could counteract these effects by increasing inflationary pressures.
“Inflation has been the top concern for small businesses,” said Tom Sullivan, VP of small business policy at the U.S. Chamber of Commerce. Business owners should monitor the administration’s actions closely, as they could shape the cost of goods, labor, and borrowing.
2. Small Business Administration (SBA) Leadership
The SBA is set to welcome Kelly Loeffler as its new leader, pending Senate confirmation. While the agency is unlikely to see immediate changes, its priorities may gradually shift under Loeffler's leadership. The SBA has been a lifeline for small businesses, particularly during crises, and its future programs and lending policies will be pivotal for owners.
3. State-Level Labor Law Changes
Labor regulations are evolving across the U.S. Six states, including California, New York, and Washington, are increasing their overtime pay thresholds in 2025. For example, Alaska will raise its exemption threshold to $54,080 by midyear. Employers in affected states must ensure compliance to avoid penalties.
Additionally, 23 states and 65 local jurisdictions are raising minimum wages, with adjustments taking effect throughout the year. These increases could strain budgets, especially for businesses operating in multiple states.
Rich Kingly, CEO of Driveway King, highlighted the challenge: “As minimum wage rates rise, it adds to the financial pressures of running a business, especially with fluctuating material costs.”
4. FinCEN Registration
The Corporate Transparency Act requires millions of small businesses to register with the Financial Crimes Enforcement Network (FinCEN). Although the rule is temporarily blocked in court, it could go into effect in 2025.
The regulation mandates businesses to disclose personal information about their owners. Noncompliance could result in fines up to $10,000. While intended to combat money laundering, many small business owners find the process burdensome and poorly communicated.
Steve DiMatteo, CEO of Cleveland Vintage Shirts, shared his frustrations: “What other rules and regulations am I going to miss because of a lack of clear communication from the government?”
5. Taxes on Payment Apps
The threshold for reporting earnings from third-party payment apps like PayPal and Venmo is being phased down. Starting with 2024 taxes, businesses must report payments exceeding $5,000. By 2026, the threshold will drop to $600. This change could significantly increase the administrative burden for small businesses.
What to Expect
2025 brings both opportunities and challenges for small businesses. While the administration may lean toward pro-business policies, uncertainties around inflation, labor costs, and new regulations demand careful attention. Staying informed and proactive will be key to navigating this shifting environment.
