What can you do to stay ahead?

1. Evaluate expenses and revisit your budget

Once you determine if and how new minimum wage legislation will affect your business, it’s time to look at the big picture. New payroll costs may have implications for how you manage other expenses like utilities, inventory, supplies, and out-sourced work or third-party relationships.

By listing and evaluating existing or anticipated expenses you can create a comprehensive budget and determine what, if any, cuts or changes you’ll need to make.

2. Don’t forget payroll taxes

Higher minimum wage rates also mean higher taxes. As you budget for your new payroll obligation, it’s important to account for increases in Social Security and Medicare expenses as well as taxes on things like disability and unemployment insurance.

3. Make strategic cost cuts

Many business owners assume the way to address payroll increases is to make staffing changes or pass costs off to customers. But before you cut employee hours or raise prices, determine if there are any other cost-saving measures you can take.

For example, can you work with suppliers or vendors to negotiate better costs? Are you paying for services that you no longer need or are cheaper elsewhere? Of course, “cheaper” isn’t always better. Before making drastic cuts or going with the cheaper option, make sure it can accommodate your needs without jeopardizing the customer experience or operational efficiency.