Friday, October 22, 2010

New 1099 Tax Rule = Paperwork Nightmare


The very word sends a shutter through folks in almost every profession who after long, tiring days must succumb to the job that's not quite finished until the i's are dotted and t's are crossed.

Detectives who chase down bad guys spend most of their waking moments conducting witness and suspect interviews, but each evening as they get back to the office, there are mountains of paperwork necessary to record their day's work and justify whether someone is guilty or innocent. Paperwork lays the groundwork for their cases in court.

Doctors who make rounds from patient to patient, adjusting medications, performing surgeries, making emergency medical decisions. At the end of each day, medical charts must be in order to ensure the right continued health care for every patient and for insurance purposes.

While business owners have their own paperwork struggles ... their situation just got worse.

The impending 1099 tax rule that's slated to go into effect in 2012 in conjunction with the new health care legislation means a business owner - landscapers, too - have to file 1099 forms for EVERY vendor you spend more than $600 with in a year.

Consider this example, which shows how daunting the paperwork filing task will become: A business that spends $20 a week on pizza for its employees, for example, would spend a total of $1,040 a year — and would need to file a 1099 form to that local pizzeria.

Reuters has an easy-to-understand breakdown of how and why this rule came to be, the likelihood it will actually go into effect, and what business owners need to know about it. Check it out here and let us know what you think.

- Nicole Wisniewski

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