About 'small business bookkeeping services'|Basics Of Small Business Bookkeeping And Record Keeping
When congress passed the health care bill, some of the country when up in arms about the potential cost that this bill would pose on American society. What most people did not realize was that this health care bill included a law on the books that had nothing to do with health care. Section 9006 of the Massive Protection and Affordable Health Care Act of the health care bill allowed a law to be included that requires more accountability for small businesses taxpayers. So the question is, what effect will section 9006 of the health care bill have on your small business? Explanation of Section 9006 - Massive Protection and Affordable Health Care Act Beginning in 2012, companies will be required to prepare IRS 1099 tax forms for all purchases exceeding $600 from any vendors. According to the government, this bill is suppose to assist in paying for the health care bill's cost. How, might you ask? It is speculated that the bill will cut down on companies, who have in the past, embellished their expenses reported on their tax filings. By doing this, companies are lessening the amount of income available for taxation. So in order to solve this problem, the Internal Revenue Service (IRS) requires companies to submit an IRS 1099 tax form for purchased products exceeding $600. This will cause companies to keep adequate records and will cut down on inflated expenses. The bottom line...more income will be available to be taxed to aid in the cost of health care reform. Wait...there's more! Beginning in 2011, credit card processing companies will also be required to report your annual transactions that exceed $20,000 on IRS form 1099-K. Therefore, corporations will only be required to report all payments made by cash or check as stated above. The Impact that the Health Care Bill will have on Your Small Business According to Bonnie Lee who is an Enrolled Agent, and author of "Taxpertise: The Complete Book of Dirty Little Secrets and Hidden Deductions for Small Business the IRS Don't Want You to Know", this law cost small businesses additional hours spent in bookkeeping. Ms. Lee continues by stating "...purchases that your business makes from Staples, Office Depot, and other vendors are included as reportable transactions." Therefore, you must spend additional time and money in tracking your vendor's federal ID numbers, all cost associated with each, and finally transfer such information to the IRS 1099 tax form. On the flip side of the coin, small businesses should also expect to receive IRS 1099 tax forms from businesses whom they sold more than $600 of goods or services. Ultimately, this is going to cost small businesses more in preparation time, bookkeeping cost, and will include mountains of paperwork. On the other hand, some argue that this bill will cause small businesses to be more accountable and organized in their record keeping. Lawyer D.J. Marcus who runs a law office in Denver, CO stated that this health care law will "cut back on fraudulent business deductions, which will ease the burden on the IRS to catch tax cheats and, hopefully, save the rest of us honest taxpayers the hassles associated with overbearing IRS scrutiny." Although their will be increased preparation and paperwork associated with this new bill, Mr. Marcus argues that the paperwork and preparation will not be overbearing. Overall, he believes that this new law will create more accuracy and efficiency in small business accounting practices. Finally, we can argue all day in regards to the pros and cons of this new health care bill, and it's effects on small businesses. However, the issue still remains that each small business will be forced to devote more time and money towards the preparation of their annual tax returns. Sources: New 1099 Requirements for B2B Transactions Health Care Bill Section 9006 and Your Small Business |
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