Businesses in Trouble Due to Upcoming Federal Regulation
The upcoming health-care reform could carry an unwanted surprise for businesses. Mandatory additional 1099 reporting may cause businesses without a CPA to raise their expenses.
Las Vegas, NV (PRWEB) December 2, 2010
An upcoming federal regulation will launch a flurry of tax documents in an effort to ferret out unreported business income. This could cause major problems for small businesses that don’t currently have the staff to fill out the additional paper work. Some experts, including a Las Vegas CPA firm, say the law isn’t even likely to deliver on its purpose.
“We lobbied against this just because it’s a pain for our clients” said Jeff Breeden, a partner in Las Vegas accounting firm Stewart, Archibald & Barney. “If you have to focus on how you capture accounting information in a better way, it’s probably not a horrific thing. But it’s a ridiculous thing given the goal. I don’t think expanding (1099 reporting rules) to corporations is going to do a thing for the tax gap.”
Experts predict that small businesses who are taking advantage of local CPA firms will be in a much better position once the law takes place, which could be soon, as it is attached to the upcoming health-care reform.
To understand how the law will change accounting procedures, consider existing bookkeeping requirements. Under current law, businesses must send 1099 forms to any independent contractor from whom they purchase $600 in services in a year – the magazine who buys an article from a free-lance writer, for example, or the developer who retains a law firm.
The new law will expand 1099 reporting to tangible goods, and it will demand that businesses submit the forms to corporations with whom they do business. That means landscaping companies that buy more than $600 a year in gasoline for their trucks will have to file 1099s on those purchases. If you throw $600 worth of pizza parties for your workers annually, you’ll have to send forms in for the restaurant. If you buy office supplies from Costco, you’ll need to send the big-box chain 1099s detailing the purchases. Businesses will need to track and report purchases of flowers, gift baskets, office equipment, inventory and any other goods totaling at least $600 a year.
It’s easy to see how this could quickly become a nightmare for any small business who doesn’t already have a CPA firm handling their bookkeeping. And it looks like there is little chance for the law to be over-turned. Sen. Bill Nelson, D-Fla., suggested raising the $600 reporting floor to $5,000 and exempting companies with fewer than 25 employees, but it failed to pass in congress.
For additional information on how upcoming changes may affect businesses and individuals, contact Stewart, Archibald & Barney or visit http://www. las-vegas-cpas. com.
About Stewart, Archibald & Barney:
Stewart, Archibald & Barney, LLP was established by Gary Stewart in 1972. Since its inception, the firm has grown to employ over thirty-five people. As a well-respected firm in the community, they are continuously striving to help build a more financially prosperous Las Vegas.
Contact:
Stewart, Archibald & Barney
702-579-7000
Http://www. sabcpa. com
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