1. How Will Your Small Business Taxes Be Affected by
the New Healthcare Law?
Several partsof the Affordable Care Acthave beenenactedover2014 that maywell affecthow small-
businessownersfile theirtaxesthisyear.Because of the debate andconcern overhow exactlythislaw
will impactbusinessownersthere hasbeenalotof misinformation(well-meaningandotherwise) onthe
internet.
Thismeansbusinessowners,fromthe self-employedtothose withhundredsof employeesneedto
learnthe truth about howthislaw will impacttheirbusiness –specificallywhentheyfile taxesthisApril.
To helpwiththis,here issome basicinformationforbusinessownersof all types:
Self-Employed Professionals
An “IndividualMandate”wentintoeffectatthe start of 2014 that appliestoself-employedfreelancers,
entrepreneursandconsultants.Thismandate requiressuchindividualstohave at leastminimum
coverage health-care.If youdonot,youhave a few alternatives:
 File foran exemptionof healthcare coverageif youqualify
 Whenfilingyour2014 Federal return,youcan alsoinclude a“sharedresponsibility”payment.
Thisbasicallyleavesall self-employedprofessionalsinone of the followingcategories:
Self-Employed Professionals with basic healthcare coverage
If you alreadyhave healthcare coverage thatmeetsorexceedsthe requiredminimumstandard,all you
needtodo ischeck the box to indicate youdo.The IRS’swebsite providesafull listof coveragesthat
qualifyforthe requiredminimumcoverage.
If you do nothave coverage that meetsthese standardsyoucaneitherapplyforan exemptionormake
the sharedresponsibilitypaymentmentionedabove:
Self-Employed Professionals without coverage who qualify foran exemption
If you qualifyforanexemption,youcanuse Form 8965 whenfilingtoindicate this.There are afew
qualifyingscenariosforexemptionstatustobe granted,suchas:
 You had coverage forthe majorityof the year (withoutfor3 monthsor less)
 The cost of healthinsurance wouldexceedmore than8% of yourwages
 If you livedoutsideof the US properforat least330 daysoverthe spanof twelve months
Some specificexemptionswill require youtogothroughthe HealthInsurance Marketplace andothers
will simplyneedtobe claimedatthe time youfile yourreturn.The IRSwebsite containsamore
complete listof exemptionsandhowtoclaimthem.
Self-Employed Professionals without coverage who do not qualify for an exemption
If you do nothave the requiredminimumcoverageanddonot meetanyof the qualificationslistedon
the IRS website foranexemption,you’ll have tofile anadditional shared-responsibilitypaymentwhen
youfile your2014 returns.Youhave two optionsforhow to do thisin2014:

2.  You can pay 1% of yourhousehold’s income overthe returnthresholdforyourreturnfiling
status.
 Pay a flatrate of $95 for eachadultand $47.50 per childwithamaximumtotal paymentof $285
for eachfamily.
For more informationonmakingyourshared-responsibilitypaymentsandoptionsavailable toyou,
please visitthe IRSwebsiteandthe US Departmentof Treasury’sfactsheetonthe Individual Shared
ResponsibilityProvision.
All self-employedcontractorsthatfile individuallyandmake more than$200 annually(or$250,000 if
jointlyfilingwithaspouse) mustalsopaya Medicare tax.Thistax is.9% and more informationis
available onthe IRS’swebsite.Additionally,entrepreneurswitha“moderate”income asthe IRS
considersitcan actuallyreceive tax creditif theypurchase healthcare coverage throughthe
Marketplace duringopenenrollmentperiods.
Business Owners with employees other than themselves
If you are a small businessownerandyounow findyouneedtoprovide healthinsurance foryour
employeesasrequiredbythe new healthcare law,you’ll needtopurchase themcoverage viathe Small
BusinessHealthOptionsProgram(SHOP).Thisprogramestablishesonline coverage“exchanges”
designedtoprovide smallbusinessownershealthinsurance fortheiremployees.
The IRS determineswhocanuse these SHOPexchangesandwhatbenefitsandpremiumsapplyto
businessesbaseduponthe numberof Full-TimeEmployee Equivalents(FTEs).Thisnumberdoesnot
include seasonal orcontractemployeesorthe businessownerthemselves.Additionally,smallbusiness
ownersmayreceive creditsdependingonthe average wage of theirFTEs.
Small Business Owners with 25 or Fewer Employees
Tax creditsforsmall businessownerswith25or feweremployeesare available.The bestcreditsare for
businesseswith10or fewerFTEsthat make lessthanan average of $25,000 annually.Thinkof itthis
way:the smalleryourcompanyis,the biggertax breakyouwill be eligible for.Asof the startof 2014, if
youhave 25 or feweremployeesyoumaybe eligible forcreditsall the wayupto 50% of your
contributiontowardsemployee insurance premiums.Thisamountis35% for NPOsandtax-exempt
businesses.
However,yourcompanymustqualifytoreceive the tax breaks.Thisfirstandforemostmeans,asstated
earlier,purchasinginsurance throughaSHOPexchange.Butitalso meansthe following:
 You mustuse the SHOPexchange forthe state youare in.
 You mustbe payingat least50% of the premiumsforyouremployee’shealthcare insurance.
 The average wage of all FTEs mustbe lessthan$50,000 annually.
SHOPhas a tax creditestimatoryoucan use to determine whatcreditsyourbusinessmaybe eligible for
whenyoufile.Suchcreditscanalsobe retroactivelyclaimedforanyyearyou’ve purchasedhealth
coverage througha SHOP exchange since 2010. Whenfiling,use IRSForm8941 andfollow the directions
carefully.
Small Business Owners with 25 – 50 Employees

3. Businesseswithupto50 FTEs may alsouse SHOP exchangestopurchase healthinsurance coveragefor
theiremployees.While youare notmandatedtouse the SHOP exchangeslikelargercompanies,youare
alsonot incentivizedwithtax creditsthe waysmallerbusinessesare.
Business Owners with more than 50 Employees
All companieswithmore than50 employees are,asof the start of 2014, mandatedtoprovide health
insurance coverage toat least95% of theirFTEs andtheirdependents.If theyfail todoso,theywill have
to pay penaltyfees.Additionally,evenif the employercoversthis95%,theymay still have topay
penaltiesif evenasingle employee receivesatax creditforhavingto purchase theirownhealth
insurance througha state run SHOPexchange.
For the year 2014, the penalty,orSharedResponsibilityPaymentwouldbe determinedbymultiplying
the numberof FTEs you employeeby$2,000. The first30 FTEs are exempt,however.Thatmeans,for
example,thatacompanywith70 employeeswouldonlypay$80,000 insteadof $140,000 (40 FTEs x
$2000, not 70 FTEs x $2000).
Still have questions?
Please call us for a free appointment with Miami business attorney
Yoel Molina in our Miami office at 305-548-5020.
Additional resources:
 www.IRS.gov
 www.Healthcare.gov
o localhelp.healthcare.gov
 HealthInsurance Marketplace Call Center:1-800-318-2596 (Available 24/7)