Business always poses new opportunities and perspectives for CEOs around the world, but it is no secret that there are unique difficulties as well. Sustainability and technological advances seem to be on the top of the list for many companies, and it is clear that there are certain hurdles CEOs must get over when considering how to advance their companies in these areas.

Top Three Challenges

1. Regulatory Environment - The regulatory environment is considered the greatest challenge facing CEOs today. Spending time with regulators or government officials makes up a large portion of a CEO’s job for the New Year. Businesses in the healthcare and financial services sectors will be most affected by regulation. New regulations tack a heavy cost burden on companies, as they are forced to reorganize their structures in some cases, and change their data tracking and gathering systems. These regulations can limit revenue growth and profitability. Many CEOs have no choice but to concentrate their efforts on regulation, which ultimately contributes to added costs and expansion restrictions.
2. Global Economy - Another issue challenging CEOs today is the global economy. Attempting to reach out to customers around the world is a tough job, especially when you’re competing with established market players such as a small business owner. Studies have shown that an increased number of corporate leaders believe global economic growth will decline or be held back in some way this year. Fortunately, the U.S. seems to be in a relatively good place, ranking as one of the top three growth markets by 38% of CEOs. However, considering how uncertain the market is, it is important for business leaders to keep abreast of global opportunities and threats. Online marketing, creative branding, and reputation management are the key elements behind competing in the global market today.
3. Tax Increases - Tax burdens have damaged the confidence of many CEOs with regards to revenue growth. With many issues stemming from the regulatory environment, it is no wonder that many companies are struggling with new tax increases for 2015. CEOs can expect to deal with issues such as:

• The ACA- CEOs should consider the Affordable Care Act in their tax planning agenda, particularly if the business has more than 50 employees.
• Corporate tax rates- There is much talk in Washington about corporate tax reform, which appears to be aimed mainly at large multinationals that are taxed as C corporation. If tax rates are reduced for these corporations, small businesses structured as passthrough entities (S corporations, LLCs, partnerships) may not get the same tax benefits unless there is a comparative amendment to personal tax rates.
• Net investment Income Tax- This tax applies to high income individuals with investment income, so if you have a stock portfolio, rental income, or any other “passive” income, so to speak, watch out for this 3.8% tax.
• Expiring tax breaks- CEOs will find that tax credits have dramatically changed for 2015. Both the bonus depreciation deduction and work opportunity tax credits have expired, and the section 179 deduction has dropped from $500,000 to merely $25,000 for this year. These may once again be extended by Congress as they were for 2014, but the uncertainty makes it difficult to make strategic decisions on capital expenditures and hiring.

Without a doubt, CEOs have their work cut out for them this year! Keeping up with the times while maintaining safe and profitable business operations continues to depend, in part, on complying with governmental regulations.

For more information, contact us.