Sunday, May 29, 2011

New Law Will Save Big Bucks for Small Businesses

A bill was sent to President Obama’s desk yesterday that repeals a small part of his own healthcare legislation. However, if it becomes law, it will make life a little easier for remodelers, contractors, and any other small business that uses its fair share of vendors.
By a vote of 87 to 12, the Senate approved the Small Business Paperwork Mandate Elimination Act of 2011 on April 5. The law repeals a burdensome tax paperwork requirement that was part of the Patient Protection and Affordable Care Act approved last year. This would have mandated that starting next year businesses would be required to file a 1099 for every vendor that provided more than $600 in services or goods throughout the course of a year.
The annual $600 limit was for all vendors so contractors would find themselves sending out a stack of 1099s not just for their subs and vendors but also for mundane purchases such as coffee, office supplies, and even fuel.
No doubt the requirement — had it become a law — would have meant that businesses would have to spend resources on accountants and bookkeepers to adhere to the rule rather than on expanding their operation in a more meaningful way.
Aside from eliminating the 1099 requirements, the new potential law also repeals a component in the Small Business Jobs Act of 2010 that stipulated that as of Jan. 1, 2011, landlords had to submit 1099s to vendors that supplied them with more than $600 of services.
Contractors, remodelers, and other small businesses can continue sending out 1099s as they have been in the past based on the IRS’s reporting procedures.

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