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Donald Trump will be of the country The 47th President in January. He comes with a lot of baggage and there are many reasons why people didn't vote for him. This column is not about that.
This is for BUsINEss. When you consider a second Trump administration based purely on how it would affect businesses in this country, it's pretty clear that it's going to be good. My business – a technology consulting firm specializing in customer relationship management – will see particularly positive effects.
I am realistic. I understand that President Trump will not create new customers or innovate new products for me. He will not solve the serious issue labor shortages that make it hard for me to find and keep good things talent. A second Trump administration cannot magically wave a wand and fix the future inflation or lower interest rates. He will not manage my business, collect my receivables, or pay my bills. However, the Trump administration will affect my business in three important ways.
Related: 10 important ways a second Donald Trump administration could affect your taxes
1. Taxes
For starters, my tax bill won't go up. It can actually go down.
The biggest discount that likely won't go away is Qualified Business Income Tax deduction for pass-through entities such as S-corporations and partnerships. My company is an S-corporation. This year, I take a 20% deduction on my business income before it goes through on my individual return. This deduction, which was approved by the first Trump administration in 2017, will retire at the end of 2025.
many small business owners also enjoyed a standard deduction of $29,200 on their jointly filed individual tax returns. However, this discount will be cut in half after 2025.
The significant deductions that allowed us to write off the first year's cost of capital equipment purchases were reduced and faced further restrictions this year. Many of my clients who used to deduct research and development expenses in their first year have been forced to amortize those payments over longer periods due to expiring rules.
Tax rates in 2025 compared to 2017 would have increased. Capital gains rates would have increased. Earners making more than $400,000 a year are likely to have new taxes imposed.
In general, taxes would have gone up for small business owners like me if Kamala Harris had been elected. Now, thanks to Trump's intent to extend or make permanent the Tax Cuts and Jobs Act of 2017 with GOP majorities likely in both the House and Senate, they won't.
2. Workplace regulations
Under the Biden administration, many government agencies have been encouraged to issue new regulations, ranging from helping unions are easier to organize for him prohibition of non-compete agreements. However, three regulations have had a particular impact on my company.
owing to the new rules for the classification of workers finalized earlier this year, it is now more challenging for me to use independent contractors. My business relies on freelancers to do development and training for our clients. We bill for their services. Our contractors are well paid and happy with them flexibility. But now, I may be forced to reclassify these freelancers as employees because the services they perform for my business are “integral” under the new definitions. Doing so means I have to pay employer taxes, provide more protections for workers, and potentially open up my benefit plans — like health insurance — to them. My contractors have never asked for this, but now I may be forced to do it anyway.
For my employees, overtime pay is increasing. Starting in January 2025, new rules by the Labor Department will make workers earning less than $58,656 a year eligible for overtime pay, up from $35,568 earlier this year. This means that my salaried workers who meet other conditions will be entitled to overtime pay if they work more than 40 hours a week. My company's flexible PTO plan mitigated the obligation to pay overtime in any given week because an employee may decide to work fewer hours at another time. But this rule will challenge that strategy and likely increase my compensation costs.
Finally, the Equal Employment Opportunity Commission issued new rules earlier this year that makes employers like me responsible for the conduct of our employees in and out of the office and when they are participating in online calls. For example, if co-workers harass an LGBTQ+ employee at a non-company event at a bar on Saturday night, they may feel that their work environment is hostile and if I don't I know about it, I'm responsible. Another employee on a Zoom call with a salesperson might feel uncomfortable about a book on a bookshelf behind them. Again, I am responsible as an employer for creating one non-hostile environment. To address these concerns, I need to pay employment lawyers, trainers, and a technology company to set up a reporting system.
What do these three regulations have in common? They are not the law. They are interpretations of the law by government agencies. There are lawsuits challenging these rules. The Biden administration is responding to these lawsuits. A Trump administration won't, which means the rules will either be changed or not enforced. President Trump likely won't fill EEOC leadership positions as they expire over the next four years, leaving that agency toothless and giving me — and many small businesses — a reprieve.
3. Business environment
True story: A friend who works in the finance department of a large public company told me this week that his company had two budgets prepared based on the outcome of the election. If Harris had won, the budget would have been “protective.” Trump's budget is “expansion.” To me, that says it all.
If a president affects the economy, it is more intangible than tangible. When the rhetoric from the highest offices of government is accusatory, insulting or disapproving of business, most businesses circle the wagons. When those same political leaders pass rules and regulations that target companies, those companies have to pay for those regulations, which takes away funding for their growth. And when leaders point the finger at “big corporations” and “the rich,” they risk those entities pulling away from investing, hiring, and spending.
But the opposite is true when there is a pro-business president in office. The recent rise in the stock market is proof of this. So is the “expansion” budget in my friend's company. The reason is clear: people ride bikes when it's sunny; they stay inside when it rains. Businesses — and the millions of employees who work for them — take more risks and enjoy more rewards when they know they don't have to worry about government interference in their operations. You cannot define this benefit. But you know it's there. That's why small business trust it was higher during the first Trump administration than during the Biden administration.
My company sells sales and marketing software. It is a discretionary investment – one that my clients make when they feel confident enough in the future to invest in it. technology that will help their firms grow. Given the more favorable business climate, I expect that many will begin to open their pockets to make this investment.
Of course, there will be challenges under the Trump administration. And there are still many uncertainties. Many economists have warned about the negative impact of FEES he plans to object. Others are very concerned with the deficits his policies could create. Some industries – particularly those that rely on government contracts or chip manufacturing, as well as environmental, education and government service initiatives – are likely to suffer. Others will benefit. There will be winners and losers under this administration. But for my business in particular? It's a win.