How the “One Big Beautiful Bill” Could Impact Small Business

By /

Introduction: A Tidal Wave of Changes—Are You Ready?

If you’re a small business owner who relies on outsourced CFO services or handles your own tax strategy, you can’t afford to ignore the potential impact of this sweeping new legislation. The proposed bill, dubbed the “One Big Beautiful Bill,” may still be winding its way through Congress, but the ripple effects are already sparking conversation in financial circles.

Why should you care? Because it could change the way you manage everything from payroll taxes and business deductions to healthcare benefits and capital investments. Whether you outsource your CFO duties or manage financials in-house, your tax planning playbook is about to get rewritten.

From limitations on expense deductions to new depreciation rules and a revived focus on Opportunity Zones, this article breaks down what matters most for small businesses. We’ll also explore how a savvy outsourced CFO can help you translate these policy shifts into proactive strategies—not just for compliance, but for growth.

Let’s dig into what could change, how it might affect your bottom line, and what you can do now to prepare for whatever version of this bill becomes law.

1. No Tax on Overtime and Tips: What It Really Means for Employers

One of the most talked-about elements of the new bill is the elimination of federal income tax on tips and overtime pay. While it sounds like a win for workers, it may lead to greater use of variable compensation. Some economists suggest it could push more employers to reduce base pay in favor of performance-based incentives.

Consider this example: A restaurant employs a full-time server named Maria who typically earns $1,200/month in tips and $2,500 in regular wages. Under the current tax code, Maria pays approximately $180/month in federal income taxes on her tips. Her employer also pays payroll taxes—including Social Security and Medicare—on those same tips.

If the bill goes into effect, Maria’s federal income tax burden on tips would be eliminated, increasing her take-home pay. However, the employer would still be responsible for its share of payroll taxes (like the 7.65% FICA contribution) on those wages unless separate legislation changes that rule. In other words, while Maria benefits directly, the employer does not receive a parallel tax break. Business owners may feel pressure to adjust wage structures to manage the overall compensation burden.

This shift could reduce predictability in earnings and increase employer reliance on customer traffic, especially in tip-heavy environments where payroll dynamics are already complex.

According to a recent Forbes article, “This change may cause headaches for payroll departments and bring added complexity in managing compliance, particularly in industries where tipping is common.”

Strategic Response: Audit your compensation policies now. You may need to rethink how you schedule overtime and how you structure bonuses. Update payroll software in advance and educate employees about the real-world impact of these changes. Consider conducting scenario planning for different compensation models to assess how these tax changes might ripple through employee expectations and business operations.

2. Revisions to Business Expense Deductions: More Tax Planning, Less Wiggle Room

The bill locks in or expands caps on certain deductions while sunsetting others. This includes continuing limitations on business interest deductions and setting floors for charitable deductions. For companies used to creative tax planning, it narrows some of that space.

Here are a few key deduction-related items and how the bill impacts them:

  1. Business Interest Deductions: The bill maintains the limitation on deducting business interest expenses to 30% of a taxpayer’s adjusted taxable income (ATI). For example, if a business has an ATI of $100,000, it can deduct up to $30,000 in business interest expenses. Any interest expense above this limit must be carried forward to future tax years. This limitation can significantly affect highly leveraged businesses, especially in years with lower earnings.
  2. Charitable Contributions: The bill introduces a 1% floor for corporate charitable deductions, meaning corporations must contribute at least 1% of their taxable income to qualify for a deduction. The existing 10% cap remains unchanged. For instance, a corporation with a taxable income of $2,000,000 must donate at least $20,000 to be eligible for any charitable deduction. This change may discourage smaller charitable contributions and impact corporate philanthropy strategies.
  3. Meal Expenses: The bill continues to limit the deduction for business meal expenses to 50% of the cost. For example, if a business spends $10,000 on client meals, only $5,000 can be deducted.
  4. Moving Expenses and Commuting Benefits: The bill maintains the elimination of deductions for moving expenses and commuting benefits for most small businesses, a change that originated with the Tax Cuts and Jobs Act of 2017. This means employers cannot deduct costs associated with employee relocations or provide tax-free commuting benefits. If your supplying these benefits, talk with your payroll company about how to account for them correctly for payroll tax purposes.

These changes mean higher effective tax rates for many companies and require tighter tracking and strategic planning to maximize allowable deductions.

The National Federation of Independent Business (NFIB) has cautioned that “small firms may see higher effective tax rates if they can no longer deduct routine business expenses as before.”

Strategic Response: Revisit your tax planning strategy this quarter. If your business gives to charity through the entity, consider shifting some contributions to personal giving. Tighten expense tracking and work closely with a tax professional to identify what deductions remain viable.

The interest expense limits may be a significant item for small businesses – I have several clients whose profitability can swing from year to year while interest expense remains the same. For S-Corps, there may be some flexibility by adjusting owner compensation levels (a conversation tax accountants love to have!). If you anticipate that your business interest expense will exceed the 30% limit of Adjusted Taxable Income (ATI), it’s important to consider strategies to mitigate the impact. Another approach is to refinance high-interest debt into lower-interest loans or shift toward equity financing, which avoids non-deductible interest and may improve your bottom line. Alternatively, delaying capital expenditures that would otherwise reduce your ATI in high-interest years can help keep the deduction threshold higher when you need it most.

3. Reinstating and Expanding Depreciation Allowances: A Green Light for Investment

One of the bill’s most business-friendly aspects is the return of bonus depreciation. It allows small businesses to immediately expense the full cost of qualifying property. This can help preserve cash flow, especially in capital-intensive industries.

It is important to note that this does not provide small businesses more deductions. Instead, it merely accelerates them. For instance, a new truck purchased for $30,000 may have required expensing for tax purposes over five years, or $6,000 per year. Under the proposed law, it would now be 100% deductible in the year purchased.  In both scenerios, the tax deduction is the same, however, the period taken is different.  

As Accounting Today reports, “Restoring 100% bonus depreciation means businesses can once again front-load tax savings on major purchases.”

Strategic Response: If you’ve been delaying equipment upgrades or vehicle purchases, now might be the time. Consider scheduling capital expenditures before interest rates climb further. Your accountant can help structure purchases to optimize tax benefits.

4. Digital Transaction Rules Rewritten: What Happens to Your 1099-Ks?

The new legislation repeals the $600 reporting threshold for third-party networks like Venmo, PayPal, and Square. While that sounds like a reprieve, it’s not a return to the Wild West. Expect a revised threshold somewhere between $600 and $20,000—and more sophisticated tracking.

This doesn’t mean you can stop keeping clean records. As CNBC explains, “Even without IRS mandates, digital platforms are developing their own reporting systems to comply with state and corporate data requests.”

Strategic Response: Use accounting software to track all income, regardless of whether it triggers a 1099. Don’t rely on platforms to do the work for you. Consider consolidating transactions to fewer platforms to simplify reporting.

5. Opportunity Zones: New Fuel for Expansion

Opportunity Zones are back with a vengeance. Originally created under the Tax Cuts and Jobs Act of 2017, Opportunity Zones are designated low-income census tracts where investors can receive significant tax incentives for investing capital gains. These benefits include deferrals on current capital gains and potential exclusions of new gains if investments are held long-term.

Small businesses have used Opportunity Zones to finance storefront expansions, build new facilities, or raise funding through Qualified Opportunity Funds. For example, a boutique hotel chain expanded into a distressed urban neighborhood using funds raised through these incentives—reaping both tax benefits and revitalizing the local economy.

The bill proposes extending deadlines and enhancing tax benefits for capital gains invested in these zones. “It could reopen the investment pipeline for startups and service businesses operating in distressed areas,” says The Wall Street Journal.

Strategic Response: Check if your business is located in or near an Opportunity Zone. Even if not, consider forming strategic partnerships with developers or investors who are. There are incentives for both real estate and operating businesses under this provision.

6. Healthcare Flexibility Through HSAs: More Access, More Savings

The bill introduces several enhancements to Health Savings Accounts (HSAs) that can offer significant benefits to small business owners:

  • Increased Contribution Limits: For 2025, the HSA contribution limits have been raised to $4,300 for individuals and $8,550 for families. Individuals aged 55 and older can make an additional catch-up contribution of $1,000, bringing their total to $5,300 for individuals and $9,550 for families.
  • Expanded Eligibility: The bill permits individuals enrolled in Medicare Part A and those with certain Affordable Care Act plans, like Bronze and Catastrophic, to contribute to HSAs. This expansion could add an estimated 20 million more Americans to the pool of HSA contributors, providing small business owners with a broader range of employees who can benefit from HSAs. 
  • Tax Credits for CHOICE Arrangements: Employers offering Custom Health Option and Individual Care Expense (CHOICE) arrangements may be eligible for new tax credits. These arrangements allow employees to select individual health insurance plans that suit their needs, with employers contributing a fixed amount toward premiums.

This development puts more healthcare decisions (and costs) in the hands of employees but also gives employers a chance to streamline benefit plans. As Health Affairs puts it, “HSAs are becoming the go-to solution for personalized, portable health coverage in a tight labor market.”

Strategic Response: Evaluate whether your health plan is HSA-compatible. Consider matching contributions as a benefit perk, even modest ones. This approach can attract younger employees and reduce overall healthcare spending for the business.

7. Paid Family Leave Credit Extension: A Win for Small Employers Who Offer It

The Employer Credit for Paid Family and Medical Leave provides a non-refundable tax credit to employers who voluntarily offer paid family and medical leave to their employees. This credit has been extended through 2025.

Key Details:

  • Credit Percentage: The credit ranges from 12.5% to 25% of wages paid to qualifying employees during their leave. The exact percentage depends on the wage replacement rate:
    • 12.5% credit for paying 50% of the employee’s normal wages.
    • The credit increases by 0.25 percentage points for each percentage point by which the wage replacement exceeds 50%, up to a maximum of 25% for full wage replacement
  • Eligibility Criteria:
    • Employers must have a written policy in place that provides at least two weeks of paid family and medical leave annually to all qualifying full-time employees (prorated for part-time employees).
    • The leave must be paid at a rate of at least 50% of the employee’s normal wages.
    • Employees must have been employed for at least one year and have compensation not exceeding a specified threshold.
    • The leave must be for qualifying reasons under the Family and Medical Leave Act (FMLA), such as the birth of a child, adoption, caring for a spouse or parent with a serious health condition, or the employee’s own serious health condition.

Example Scenario:

Consider a small business, “ABC Marketing,” with 15 employees. They decide to implement a paid family leave policy providing four weeks of leave at 60% wage replacement.

  • Employee’s Normal Weekly Wage: $1,000
  • Wage Replacement (60%): $600 per week
  • Total Leave Duration: 4 weeks
  • Total Wages Paid During Leave: $600 x 4 = $2,400

Since the wage replacement rate is 60%, which is 10 percentage points above the 50% minimum, the credit increases by 0.25% for each percentage point above 50%.

  • Additional Credit Percentage: 10 x 0.25% = 2.5%
  • Total Credit Percentage: 12.5% + 2.5% = 15%
  • Tax Credit Amount: 15% of $2,400 = $360

Therefore, ABC Marketing can claim a $360 tax credit for this employee’s leave. If multiple employees take similar leave, the total credit can be substantial, offsetting the costs of providing paid leave.

Strategic Response: If you don’t already offer some form of paid family leave, now may be the time to pilot a limited program. The tax credits help defray costs, and the benefit can improve employee retention and recruiting.

Conclusion

The “One Big Beautiful Bill” isn’t just headline bait—it’s real policy that could touch multiple points in a small business’s lifecycle, from hiring to financing to growth planning. But it’s important to note: this bill has only passed the House. The Senate still needs to approve it, and significant changes are likely before anything becomes law.

This article is not a prediction, endorsement, or critique. It’s a guide to help small business owners understand what could be coming so they can begin thinking about the potential adjustments needed to respond strategically. While it’s too early to overhaul operations, smart owners will assess where they might gain or lose and prepare flexible strategies accordingly.

Patience is key—but so is preparedness.

Smart Accounting Strategies for Small Business Owners in 2025 Accounting might not be the most exciting part of running a small business—but it’s one of the most important. In fact, your ability to stay on top of your books, cash flow, and reporting can often mean the difference between barely surviving and scaling with confidence. Whether you’re still tracking expenses in Excel or exploring automation tools like QuickBooks, the strategies below will help you tighten up your accounting practices and make smarter financial decisions in 2025 and beyond. What Is Small Business Accounting—and Why It Matters Small business accounting is more than just reconciling your bank account. It’s the full process of recording, organizing, and analyzing your business’s financial transactions. Think of it as the foundation for every money-related decision you’ll make—from hiring to investing in new equipment. Bookkeeping is your day-to-day tracking of things like invoices, bills, and bank activity. Accounting takes it a step further—it interprets the data, helps you see trends, and ensures you stay compliant with tax laws. One of the most important choices you’ll make is your accounting method. Most small businesses use either: Cash Basis – Recognizes income and expenses when cash changes hands. It’s simple and intuitive, especially if you’re under $5 million in annual revenue. Accrual Basis – Records income when earned and expenses when incurred, giving a more accurate picture of your business’s financial health. If you're not sure which is right for you, talk to an advisor—choosing incorrectly can cause big headaches later on. Pick the Right Accounting Software for Your Needs Gone are the days when accounting had to mean piles of paper and complicated spreadsheets. Today’s cloud-based tools make it easier than ever to stay on top of your books—even if you’re not a numbers person. Some of the most popular options for small businesses include: QuickBooks Online – A go-to for many business owners thanks to its powerful features and integrations. Xero – Known for its clean interface and ease of use. Zoho Books – A budget-friendly option that doesn’t skimp on features. FreshBooks – Ideal for freelancers or service-based businesses focused on invoicing and time tracking. When choosing software, consider features like mobile access, automated invoicing, bank feed integration, and reporting dashboards. The right tool will save you time, reduce human error, and give you a real-time view of your financial position. Build a Bookkeeping System That Works A consistent bookkeeping system helps you stay organized, plan for taxes, and avoid costly mistakes. Whether you do it yourself or hire help, the key is to create a repeatable process. Start by separating your business and personal finances. Open a dedicated business bank account and credit card. Then establish clear categories for your expenses—marketing, payroll, office supplies, etc. Track every transaction regularly. Waiting until year-end (or even quarter-end) can leave you with messy books and missed deductions. Also, don’t forget to define who’s responsible for what—whether it’s you, a bookkeeper, or an accountant. Clear roles mean fewer dropped balls. Know Your Key Financial Statements You don’t have to be an accountant to understand your financials. There are three reports every small business owner should review monthly: Profit & Loss (P&L) – Shows your income and expenses over a period of time. Are you profitable? What’s eating into your margins? Balance Sheet – Lists your assets, liabilities, and equity at a specific date. It's a snapshot of your business's health. Cash Flow Statement – Tracks the money coming in and going out. Even profitable businesses can fail if cash dries up. Most accounting software can generate these for you. Reviewing them regularly helps you make informed decisions and catch red flags before they become bigger issues. Mastering Cash Flow Is Critical You can’t spend profits—you can only spend cash. That’s why cash flow management is the heartbeat of small business finance. To avoid surprises: Forecast regularly – Look 3–6 months ahead to anticipate slow periods or big expenses. Establish a line of credit – Get it in place before you need it. Stay on top of receivables – Don’t let unpaid invoices linger. Categorize spending – Separate essential costs from discretionary ones. Cash flow isn’t just about cutting back—it’s about managing timing and being prepared. Track Expenses the Right Way Expense tracking is about more than keeping receipts. It’s how you keep your business audit-ready and maximize deductions at tax time. Make sure to: Use consistent categories that match your chart of accounts. Keep digital copies of receipts using apps or software tools. Track mixed-use items (like a home office or business vehicle) accurately—you can only deduct the business portion. Even if you’re using a spreadsheet now, consider moving to a digital system. It makes everything easier when tax season rolls around. Payroll: Employees vs. Contractors Hiring help? You’ll need to decide between employees and independent contractors. Each comes with different rules and tax responsibilities. If you hire employees, set up a payroll system that handles withholdings, benefits, and compliance. Popular options include Gusto, QuickBooks Payroll, and ADP. For contractors, you’ll need to track payments and issue 1099 forms at year-end. Just make sure you’re classifying workers correctly—missteps here can get expensive fast. Stay Compliant with Taxes and Regulations Your business structure (LLC, S-Corp, etc.) affects how you’re taxed. Understanding what applies to your business can help you avoid penalties and optimize your tax position. Here are some key tips: Track deductible expenses like travel, meals, and office supplies. Understand sales tax requirements in your state—and whether you need to collect it online. Separate personal and business finances to simplify filings. Working with a professional, especially as your business grows, can save time and stress while unlocking tax strategies you may not be aware of. Build and Maintain Business Credit If you plan to grow or secure financing, business credit matters. It helps you get loans, negotiate with suppliers, and separate your personal liability. Steps to build strong credit: Open accounts in your business name (including utility bills and a business credit card). Pay on time—always. Get a DUNS number to create a public credit profile. Good credit gives you options—and options are key to long-term growth. Make Room for Regular Financial Check-Ins Set a monthly time to review your books, even if you outsource your accounting. Ask questions like: Are we spending in line with budget? Are our receivables current? Are there any unexpected trends? This habit builds financial awareness and helps you make more confident business decisions. When to Hire a Pro You don’t have to do it all alone. A good accountant or outsourced CFO can help you: Clean up messy books Set up accounting systems Interpret financial statements Plan for taxes Manage growth If managing your numbers is pulling you away from running your business—or you just want peace of mind—it might be time to bring in a professional. Final Thoughts: Set Your Business Up for Success Accounting doesn’t have to be overwhelming. By choosing the right tools, setting up clear systems, and checking in regularly, you’ll gain control of your business’s financial future. At Krieger Analytics, we help small business owners build the financial clarity they need to grow. Whether you need help with bookkeeping, cash flow, or planning, we’re here to simplify the process. Ready to take the next step? Start with our free Small Business Financial Assessment to see how your current accounting practices stack up—and where to improve.

Feeling Overwhelmed? No worries, lets create a plan.

If you’re looking for clarity around your finances, support in building a tax strategy, or simply a second set of eyes on your growth plan—I’d love to help. I offer a no-obligation, completely free consultation for small business owners who are ready to take the next step.

There’s zero risk. Just a conversation.

Whether you’re stuck on how to fund your next hire, unsure about your margins, tired of not know where your taxes are headed, or curious about how a fractional CFO could help your business grow, reach out via my Contact Us page. You don’t have to do this alone. Let’s talk about how to make the numbers work for your vision.

Other Articles You Might Like

Related Posts

Scroll to Top

Learn More About CFO & Controller Services

[activecampaign form=15 css=1]