Be Ready For Rising Business Costs In 2014
Most businesses will experience rising costs in 2014. The economy is expected to grow at a 2% rate, which should offset some of the increasing costs. What costs can you expect to rise the most in 2014?
Health-care costs set to rise again
Employers can expect to pay at least 7% more this year than they did in the previous year as a result of rising health care costs. The health care exchanges should or are intended to keep those costs from rising at a higher rate in future years. However, time will tell on that front. Employers and employees should also anticipate that prescription drug costs will increase.
Prepare for higher shipping costs
Companies should anticipate a 5% rise in delivery costs with carriers such as FedEx and UPS. The shipping leaders have experienced a lackluster financial performance so far in 2013 and labor costs are expected to rise worldwide. Regular mail costs should also rise by a similar rate as the USPS continues to struggle to reach profitability. The USPS should keep pricing fairly consistent for packages.
If you’re shipping using trucks, expect a 2 to 5% increase as companies need to meet new regulations and the demand is currently outweighing the supply. Rail freight will also increase, albeit at a lower rate. The cheapest option for shipping in bulk internationally will continue to be via sea.
Salary costs should increase in step with the annual expected pay raises or 3.1%. Office rents should increase in-line with salary increases. However, it’s important to note that office rents can vary drastically by business location.
Property and casualty as well as directors and officers insurance should rise significantly or as high as 10%. Business interruption and cyber liability insurance should increase at more modest levels.
As for professional services, accounting may rise as new regulations will demand more time on company engagements. Legal rates should remain flat.
Travel and entertainment expenses should increase around 3-5%. Hotel supply issues and new fees may result in closer to a 5% increase. Airfare should only modestly increase as fuel costs aren’t expected to increase significantly in 2014 and carriers continue to streamline expenses.
BIDaWIZ is an online marketplace where small businesses can obtain professional tax, accounting and financial advice and services from a network of over 750 online CPAs, EAs, CFPs & Tax JDs. BIDaWIZ suite of services include the ability to ask professionals finance and tax questions, find an accountant online and work with them, and to subscribe to the premium tax and financial newsletter and knowledge base.