Dashboard: Are Business Owners Too Optimistic About 2025?

[Music] welcome to another 21 hats dashboard I'm Lauren Felman I'm here with Jean Marks happy Monday Jean and happy New Year happy New Year Lauren how was your uh holiday it's been a couple weeks since we talked it's been a couple of weeks you know I I worked a little more than I wanted to but it was a nice break basically I really enjoyed it how about you yeah the last two weeks of the year uh every year was great and I liked having Christmas and New Year on a Wednesday cuz you know even after that day off it was like hey into the weekend you know what I mean so uh so it was good and uh yeah it was it's it was a good holiday season and it's unbelievable Corporate America so many of my clients just shut down at Thanksgiving you know either officially or unofficially yeah both uh but I'm assuming everybody's getting back to work this week so you know fingers crossed for goodness sake all right so back to business uh we haven't done this in a while it's great to be speaking with you uh you wrote recently about a slew of changes coming to retirement plans um is it fair to say that these changes are basically designed to make 401ks work better for both owners and employees yeah 100% I mean this it all goes back to the secure act there was the 2019 secure Act and the 20122 secure 2.0 and uh so a lot of changes came from that legislation and some big ones are kind of hitting this year in 2025 and yeah you're right um they're all designed I mean there's a retirement crisis Lauren you know people are not saving enough for retirements so these are designed to make it easier or better or encourage people to save for retirement and by the way I I do want to say you know this is in the interest of business owners to understand these changes because the more your employees save for retirement Lauren right first of all in a 41k the more you can contribute uh without breaking those discrimination tests you know so you want your employees to save um and also I I often times come across clients where older employees haven't saved enough and you know they've been loyal and and I've seen a number of times where the business owner helps out you know like all right why don't you keep coming in a day or two a week or uh we can pay you out a certain amount of money I mean you don't leave people destitute you know so you know what's interesting though Jean everything you just said makes perfect sense I I know exactly what you're talking about but I also hear from business owners kind of the opposite which is they have a lot of young employees who just don't care uh the retirement plan isn't meaningful to them they would trade it in a heartbeat for a little more money you know this week and what's funny that you say that is that um there's actually data and I don't have it at my fingertips but I was just reading how uh the Gen Z generation that's out in the workforce and gen Z goes up until their late 20s they are the biggest savers of any generation that's right now in the workforce can you believe that they say that surprising yeah the younger people are actually saving more money particularly in their retirement plans than than anyone before that they're less Spenders and I wish I had that date at my fingertips to share with you but it is it it's true based on that research report that I did anyway putting all that aside right so couple things if you're running a business you need to make sure that that you're on top of okay number one um there is now a required enrollment uh requirement of business and their employees starting uh now this year in 2025 which means that if you if you started your 401k plan in 2023 or 2024 right and you've got more than 10 employees and you've been in business for more than three years you're required now to enroll your new employees and some of your existing employees based on when they started into your 401k plan so somebody joins your company boom they got to be enrolled and automatically start taking 3% of their pay and contributing it to their 401k plan and you're supposed to increase that 1% each year up to 10% so this is like this require and you're like you know before people panic the employee can opt out so you're required to enroll them and start the default setting correct that's the default setting but you need to have a form and you need to inform your employee when you know at the time of hiring that like hey man we're going to enroll you we're required by law to enroll you in our 401K unless you want to opt out you want to opt out sign this form but you need to make sure you get the paperwork done or else you're not in compliance um you know the idea obviously is to get people you know you know in it and and putting money away you know of course nobody likes to be required to do that kind of thing but that's you know that's the idea behind it so you really want to talk to your benefit plan a minute ministrator make sure you've got those you that paperwork set up and that process set up and again you know again this is for any 401k plan started in 2023 or 2024 uh you have to have more than 10 employees you have less than 10 employees you don't have to do this um and you need if you've been operating more than three years you have to do this if you've been operating less than three years you don't have to do this either can you do it if you want to but you're not required to yeah I mean you can yeah if you want to yeah of course I mean that's you know that's entirely up to you but any anyway that's that's one big thing is the required enrollment um you know requirement this year that's number one um more people people can now contribute more to 401ks this year the number went up it's going up to $23,500 from 23,000 I I also advise um if you've got older employees anybody over the age of 50 um tell them that they can make an additional catchup contribution now of $7500 and they can do it pre-tax and uh take advantage of this over and above what they're contributing that's like a big deal that's like a big number and that way people can put money away more money into their 401k to help them with uh with their retirement and remember again the more that they put in the more you can put in you know so without filling those discrimination tests and then the third biggest thing that's happening uh Lauren is the Roth accounts there's really no changes in Roth accounts this year but it's it's I just want to remind everyone that as a business owner you can now start a Roth 401k for yourself you mean yeah you can do it yourself or you can do it for your company and I we've been telling all of our clients start a Roth 401k you can now contribute to it if you want to or your employees can contribute to it and and again just to make sure everybody's clear a regular 401K you put money away You're Just deferring your taxes right you you contribute to it now but at some point the government's going to force you to to distribute that money and pay taxes on it when you're when you're much older well with a Roth you're putting after tax money into it and it grows tax-free so it's a big bonus if you you know you put it in now if you're a younger age you put money into a Roth that grows taxfree for you know forever that that that's a big benefit and now employers can offer this to their employees so I I strongly recommend that you uh consider that so those are among some of the new things in the 401 1K rules there's other things like more part-timers can participate for example in a 401k plan you want to talk to your benefits administrator or your accountant or somebody who knows anything about your 401k plan by the way it's probably not your accountant because we don't know nothing about that so talk to your benefits people they're the ones that supposedly know the rules all right next topic uh it is 2025 uh you wrote another piece recently noting that business owners are kind of optimistic about 2025 but you question whether they're being realistic uh what do you mean by that and I think I think you would agree with this as well Lauren right I mean like there's all these surveys that are coming out about business owners you know about their confidence and the nfib had a survey recently it's like a 23mon high in business confidence and yeah yeah yeah it's Trump Trump trump and it's Pro business and you know yay and all that kind of stuff but like man I'm like I'm telling my clients all right everybody don't don't you know calm down a little bit on your confidence cuz we still have like issues that businesses are are dealing with I mean inflation is still 50% higher than the fed's Target and interest rates themselves are you know the prime rate is still 7 and a half% and you know the FED has already said that they're not you know going to be jumping up and down to reduce rates that much faster uh in you know in in the coming months of 2025 so we are still dealing with a you know I think that's in part because they see some of the possible policies coming down the road as being inflationary inflationary which gets me to my next point when you know tariffs you know I mean you and I can debate all day over the the know The Good the Bad and the Ugly of tariffs um you know Trump will be using them as a negotiating tool and a diplomatic tool and a whatever but you know the bottom line is though is that they are going to have you know inflationary pressure there's no question about that um I mean hopefully a lot of companies can get around that he says it won't well he says it won't I don't believe him uh no Economist believes him maybe it won't be as bad as you know what what some people think but you know come on I mean you know Walmart can only buy so many products from China they only have so much warehouse space to buy his stuff now before they sell those products they're going to have to be buying products from China uh sometime in 2025 and those costs are going to go up and that's you know it's just a fact if if we're Ling 60% tariffs on these Goods so you've got these looming tariffs they're going to create challenges for businesses both the ones that import stuff and people that buy stuff that's imported so it's there um then there's taxes you know I mean you and I talked about taxes last year and you know I was whining and complaining you know oh if you know Harris wins my taxes are going to go up and yeah you know fair enough T you know Trump has uh he wants to make permanent uh we extend a lot of the 2017 tax cuts and job acts Provisions like like the small business tax deduction the pass through deduction all that's fine but I mean he's still got to get through Congress there are a lot of you know differentiating opinions I mean I use the example in my the article that I wrote for the Washington Times I mean even when Obama got the Affordable Care Act passed I mean 34 Democrats voted against it you know I mean Trump doesn't have that kind of margin in the house you know so and we were you know we saw last week with speaker Johnson I I he barely got through to be uh you know elected speaker by the you know skin of his teeth so you know these are you know a lot of these tax cuts that he wants to make permanent they have cost to them and you know it's going to be a battle to get some of this stuff through and I think as business owners we have to be aware you know of that um Labor's going to be tight it's going to continue to be tight immigration rules are not going to help that um and regulations are still very uncertain I mean you know Department of Labor has issued a bunch of rules on overtime and and you know and independent contractors and the EEOC has rules and like what are all these things just going to automatically go away or turn around or stop or whatever it's just going to be uncertainty um so I just you get what I'm saying Lauren like you know it's not like you sound like me before the election G yeah no no no I still think it's a much better business environment I like a pro Business Administration in the White House and in Washington and all that kind of stuff are there any regulatory changes you're anticip ating that you think will be helpful to you in your business yeah I I could tell you one thing that I am uh most concerned about I mean is that um you know uh you know Trump has nominated surprisingly um a director of La a director of the labor department Secretary of Labor Lori Chavez de rer um who is quite Pro the pro act from California you know what I mean he's a big you know pro-union person and uh there's a lot of rules about independent contractors there that would not do very well with my business so uh we need to keep a close eye on what she might be doing um when it comes to both unions and independent Contracting I think that's one one bit of legislation to keep an eye on the other is minimum wage um you know most States not most half the states in this country still have the federal minimum wage of 725 an hour which is crazy but uh a lot of states are you know are increasing their minimum wages this year and I think that that's something as well that businesses have to be aware of and then I think I'm going to be writing you know soon Lauren you ask me like stuff I'm writing about um certain States particularly the you know the uh the obvious ones New York Illinois California they've got more rules and regulations coming out for their businesses on uh you on reporting requirements and uh extending you know uh uh leave for Parental leave and things like that that are going to also create some regulatory headaches for businesses um that that businesses in those States need to be aware of so yeah it's not not you know we're going to continue to have a very interesting year uh even with the pro business environment that I expect to see you uh you mentioned the tight labor market do do you think Trump is is really going to proceed with the mass deportations he has promised I do I do I actually think he's he's made promises that I think he's going to um get underway um I think you're going to be seeing not on the you know Mass deportation they're going to focus on people that have criminal records or or whatnot I think that wasn't the case last time um yeah no he's going to do it this time and he's last time he he didn't focus on criminal records it was just people who were not here legally this time he said specifically that they're focusing on criminal records first that doesn't mean he's not going to you know they're not going to get to who's next in line I mean Lauren I mean I'm expecting to see on the Evening News every night different videos of families being torn apart and this and that I mean come on we're you know we're going to be seeing all of that um I don't think you and I talked about the article that I wrote I mean I wrote a piece for the about uh how this would affect you know small businesses and um you know and I and I you know feel very strongly that from we you you and I talked about this months ago we did I know the article you're talking about let me I think I've got the headline right here will Trump's deportations create a hardship for small businesses let's hope so yeah yeah that's exactly what I wrote and and I remember you saying like because we had this discussion last year about the deportations of immigrants and I'm and you know my my point is that if if your business and you're hiring undocumented immigrants well you're breaking the law so let's hope you get impacted because you should be impacted and those businesses will be impacted and you know you had said I know that you said your case that well you know there probably businesses doing that and uh the government hasn't been cracking down on it so it was like a easier environment for them to do that and maybe you're right but you know it's just it has evolved over over decades really um yeah right now it's illegal I I mean you know it's illegal and and now you know there are a lot of laws on the books that don't get prosecuted and this is one that's it's you know I think we both agree it's it's a broken system we need to we need to fix the system and my question is whether this is you know a fix or not uh but you know there there are people there are workers there are businesses that have H you know had employees for decades who've been loyal employees who came at a time when they were encouraged to come I mean you know Lauren if they're undocumented they're undocumented and I'm not saying that all businesses do that but I you know I know I was just speaking to a woman just yesterday she runs an employment search firm and she's licking her chops because she some of her competitors Supply undocumented employees to companies and she's like those people are going to be out of business and I'm going to snap up you know that work um and those companies that have been hiring these undocumented workers they're paying less um you know and and that's why they've been it's anti-competitive um she knows pay the workers less because they're undocumented yeah oh absolutely absolutely I I know that happens but do you have data on that cuz my suspicion is that in the tight labor market of the last couple of years even people who are not documented have been getting Market wages I mean you can't it's tough to come up with data to do something like that because no UND documented worker wants to talk about that but I specifically have a landscaping client in Bucks County in Pennsylvania um who competes against other landscapers and he has named out some of his competitors to me we had this conversation about a year ago um of some of his competitors that are not only hiring undocumented people to do the work but paying them less and therefore they're able to quote jobs cheaper and it drives him nuts and it frustrates him and he keeps he kept reporting it and there's been no followup by the government well now it's a new Sheriff's in town and I think that you know those kinds of companies that are caring undocumented people and taking advantage of them or paying them less um you know they're they're going to have some problems so it gets back to what I wrote in the hill you know I mean will will small businesses suffer from this immigration move that Trump is making yeah I hope they do because if you're hiring these people and you're breaking the law uh yeah uh but the the point I would make is that it's I I mean I disagree with you a little bit on on what you just said but but even if you take that at face value it's not just those businesses who are hiring undocumented workers or have hired them in the past who will suffer if if the deportations happen it it could be almost all small businesses that will suffer when that source of Labor disappears don't you think yeah so I think the the indirect issue will be say you're hiring undocumented workers um and that that Supply goes away because they're being deported or you know the government's cracking down uh and then you have to shift so now you need to find you know employees right and you know legal documented workers well that increases the competition for the other businesses that are also searching for those same employees so you're AB everybody's cost of Labor goes up right so you know it is going to make the labor market and this gets back to the piece that I just that you and I were originally talking about about you know your your confidence I mean the labor market is tight and it's going to get tighter because of this uh you know I mean listen everybody I talk to Lauren and I know you and I feel as often as you and I disagree about different things I think there's absolutely agreement that the system is broken and for the benefit of all businesses big and small we must have a way uh to get some of these workers these immigrants the the documentation they need so they can join the labor force and every client of mine wants to hire these people uh you know there's so many hardworking good people trying to provide for their families to make a better life and they're willing to do the jobs that so many Americans don't even want to do um there has to be some type of a solution to this and um you know maybe something happens in the next four years and you know but it's frustrating to many of my clients and to me personally that our government cannot come up with a decent immigration legislation that would that would expand our labor market so I don't know maybe I'm being naive but I wish I you know I'd love to see that happen it's hard for me to see the deportations as being a step in that direction um and there there was actually an agreement over the summer that um that was reached that that got scotched but we don't need to go back into history um you know the thing that's kind of interesting to me about this is when you look at the year ahead you're kind of weighing a couple of different things against each other you know to some extent there's the regulatory environment that could improve for business owners and there's the tax environment that could in uh improve for business owners and way against that is the potential you know economic forces of the the tariffs and the tighter labor market and which do you give greater weight to um interesting question yeah I mean I I I don't know the answer I don't know the answer it depends on the business that you're in depends on how Reliant you are on tariffed Goods uh it depends on how Reliant you are on on labor um I mean there was a report that just came out at the end of last week in the Wall Street Journal about how um you know businesses and American productivity now is you know at historically high levels and that's because of you know so many businesses investing in technology so if you're you know if if you are leaning and investing in Tech uh you know maybe this is a good thing because you don't have to deal with these labor issues as much as the guy down the street who is still very labor intensive so like everything else that comes down about the small businesses that you and I cover there's 33 million of them in this country almost 7 million that are employer owned um and they have employees you mean yeah employ sorry employee yeah employee employee owned they not employee owned they are employee businesses right employer owned businesses right that's that's employer owned so businesses that have employees um in different Industries and in different regions with different levels of management expertise and um you know the ones some some are going to be affected more than others you know how are things looking for you in your business what are you expecting for this year not bad actually I'm actually looking to hire uh two more people this year which is good um so I am you know I'm I'm bullish on that um and the work has been ticking up which is also good but um I am seeing a lot of my clients I'm hiring people um Lauren which I think you might find of interest that are less on the um user side of CRM software and more on the development and Technology side because my clients are asking for um more workflows more AI more integration uh you know from their CRM systems and you know we can provide that with a higher skilled person to do that setup and development work but that's what businesses are asking for now I mean they're becoming aware that these tools are available and they're doing it because of the labor shortages that you and I have just been talking about so interesting are you finding uh people who are interested in taking those jobs or is that market tight too yeah so another really good question um I am I mean I've been I've been advertising on indeed and um I've been getting big responses um you know 90% of them not qualified for what I want and when I mean not qualified I'm looking for somebody that specializes in one of the products that we sell Zoho and has development experience I'm getting a lot of people that just have development experience but a lot like there's a lot of software developers that are out there you're looking for a very specialized skill yeah so what I'm looking for is a little bit more like I don't want to train somebody in this product I can't afford to do that I need somebody to come in that already is familiar with it but putting that aside I'm getting lots of resumes there's a lot of people that are out there looking for work um so I don't know what that means or says but I think for businesses that are looking for skilled employees um you know they're they're out there I think it's the unskilled workers that you know might be harder which again gets back to the immigration issue Gene marks is a CPA who writes weekly on small business for the guardian the hill the Philadelphia inquire the Washington Times the Chicago Daily Herald Forbes and entrepreneur you can also hear I'm on ABC radio's ey on the world with John Bachelor Jean hosts two small business podcast with paychecks Corporation and the Hartford Thank You Gan I look forward to doing this uh with you again week after week in uh 2025 you and me both Lauren I love doing this and we will talk to you very soon take care have a great week everyone [Music]