The new 1099 rules are a major pain for all small businesses. I foresee major fees and rate hikes as a result. And it may be enough to put many small businesses...out of business.
Let me explain.
I'm a small business owner. A little over five years ago I made it official: I filed articles of incorporation, did due diligence on my business name, invested money in legal and business advisors, got my EIN, opened a business account and got business credit cards.
I've been careful to use my business cards for all business expenses. I mark all receipts, attach to expense reports, include in my business accounting software, file under Reimbursed or Not Reimbursed (because it matters for taxes), and so forth.
I've managed to make it and be profitable despite a tanked economy. I know that my success helps in rebuilding our economy.
But now, I'm deeply concerned that my success is at major risk.
New 1099 rules may put me out of business.
And it's not just my problem, it's yours, too -- it's the problem of every single independent contractor, consultant, small business owner, blogger (yes BLOGGERS)...anyone who does any business and receives money, which includes goods, for services.
Reuters' Lauren Young and Amy Feldman explain:
The new rules on 1099 forms, which were attached to the health care bill and are set to go into effect in 2012, call for all businesses, no matter how small, to file 1099 forms for goods as well as for services. That sounds like a technicality, but it’s got small business up in arms.
Here’s why it matters, and what you need to know.
What exactly is the rule, anyway?
The new rule requires all business to file 1099 forms for goods as well as services, if those goods cost over $600 annually (the current threshold). It also gets rid of the distinction between corporations, which previously did not need to receive 1099s, and unincorporated entities, which did. The rule is slated to go into effect in 2012.
So...WTF? How did this happen?
Continue reading "Another Economic Meltdown: new 1099 rule hurts small business -- badly" »
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