Small and midsize businesses across the United States share common aspirations—to grow, prosper, and achieve long-term success. Yet, as these enterprises take strides toward expansion, they often encounter distinct milestones that come with their unique set of challenges. The journey from zero to a million, from a million to five million, and from five million to 20 million in revenue is dotted with hurdles, decisions, and strategies that can make or break a business.
One such pivotal moment in the trajectory of a business’s growth is reaching the milestone of 50 employees.
While it may seem like just another number on the path to success, this particular threshold carries with it significant compliance requirements that can impact the way your business operates. As a small or midsize business owner, it’s imperative to have a firm grasp of these compliance obligations and how they can influence your operations.
The 50-Employee Mark: A Critical Juncture
For business owners, the 50-employee mark represents more than just a numerical achievement. It signifies a shift in the way your company is perceived by regulators and authorities.
Compliance regulations change as you move from being a smaller business to a larger one. Though the specifics of compliance requirements can vary depending on your industry and the nature of your business, reaching 50 employees often triggers a set of common obligations that all business owners need to understand.
Understanding the Compliance Landscape
The most direct and impactful compliance requirement that comes into play at this stage is related to the Affordable Care Act (ACA). Under the ACA, most legislative requirements for employers apply to businesses with 50 or more full-time or full-time equivalent employees. This means that once you cross the 50-employee threshold, you are subject to certain rules and responsibilities regarding health insurance and coverage for your workforce.
The ACA and Its Implications for Employers
The ACA, enacted in 2010, imposes penalties on employers with 50 or more employees if they fail to offer health insurance or health coverage that meets specific standards of minimum value and affordability.
In essence, as you grow and hire more employees, you are expected to provide health insurance that meets certain criteria to your workforce. This is just one example of how compliance requirements can change as your business expands.
- Calculating the 50 Employees: To determine if your business falls under ACA’s purview, you must understand how the calculation works. It involves counting full-time employees and full-time equivalents, usually based on the previous year’s data. Full-time employees are those working at least 30 hours per week.
- Part-Time Employees and Full-Time Equivalents: Part-time employees also play a role in the calculations. Their hours are totaled, and the result is divided by 120 to determine full-time equivalents. These equivalents are then added to the count of full-time employees to see if you meet the 50-employee threshold.
- Special Considerations: Seasonal businesses may have exemptions or different rules when it comes to ACA compliance, and it’s essential to understand how these rules apply to your situation.
- Penalties for Non-Compliance: Failure to comply with ACA regulations can result in penalties, making it vital to stay informed about your obligations.
As a growing business, the road to success is not just about revenue and profit margins—it’s also about navigating the evolving landscape of compliance requirements.
Understanding these requirements, especially as you approach the 50-employee milestone, can be a key factor in ensuring your business’s growth and sustainability. So, as you work towards expanding your business, remember that compliance is an integral part of the journey, and it’s always best to be well-prepared.