Wala`au Dude

Walaau Dude aka HawaiiBoy

I ask Why? A lot!

  I'm a Former Chef, among other stuff, an #Arsenal FC fan, live in Kona, Hawaii and I play with technology all day.

 

 

 

A Prescription For Paperwork | U.S. Chamber Magazine

Publication Date: 
August 2010

By Tom Donohue, President and CEO, U.S. Chamber of Commerce
August 3, 2010

The health care bill, in addition to creating burdensome mandates and higher taxes, means one other thing for small businesses—it’s time to buy a few extra filing cabinets. That’s because a little-noticed provision of the new law will change the tax filing rules for business transactions with government, nonprofits, and businesses of any size—creating mountains of new paperwork and a slew of unintended consequences.

Under current law, a business that purchases more than $600 in services from a self-employed independent contractor during a calendar year is required to file a 1099 form with the IRS disclosing the name, address, Taxpayer Identification Number of the contractor, and amount paid. Purchases of goods or transactions involving corporations are currently exempt from this reporting requirement.

This will change dramatically in 2012 when new reporting requirements come into effect. Businesses will have to keep track of all noncredit card purchases made that exceed $600 in a calendar year. This includes goods as well as services and also applies to purchases from a corporation. If, for example, your business buys $600 in office supplies from a single retailer, you will be required to file a 1099 form. Multiply this by the number of vendors that you do business with and you have a big headache.

It’s easy to imagine rooms full of receipts and 1099s—all of which must be filed appropriately. This requirement will make accounting exponentially more burdensome, and it will force businesses to divert scarce resources from serving customers and creating jobs to bookkeeping and tax filing. If this sounds like a recipe for disaster, that’s because it is.

The new reporting requirement may also cause businesses to run into problems with the IRS. If the revenue reported to the IRS on 1099s doesn’t match with company reported revenue, the vendor could be subject to a costly and time-consuming audit. And with 40 million entities required to file 1099s under this rule, it’s not hard to imagine that mistakes will be made.

These rules may also cause businesses to limit the number of suppliers they use in order to cut down on paperwork. It’s possible that small businesses—which offer a narrower range of goods and services—could be left out in the cold. This isn’t good for anyone. The U.S. Chamber urges Congress to repeal this reporting provision so that businesses can focus on what they do best—providing goods and services, creating jobs, and stimulating economic development. If policymakers fail to act, they’ll be putting the brakes on badly needed job creation.

 

Maybe it's time to shut down the business and join a union.

Posted via email from Wala`au Media's fun posterous Blog