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Tucked away in the health care overhaul bill that became law this year was a provision that will require small business owners to keep better records of what they buy. They’ll also have to report some purchases to the government.

This new law requires small businesses to issue 1099 forms to people or companies that sell them more than $600 worth of goods or services. It takes the 1099 beyond its most common business use, which is to report money paid to independent contractors or freelancers.

The law doesn’t take effect until Jan. 1, 2012, which means owners won’t have to worry about the paperwork until early 2013, when they’re compiling their 2012 returns. But owners whose books and finances are chaotic might want to get themselves organized in the meantime so keeping track of such payments and reporting them becomes routine.

The law, called a revenue provision, was attached to the health care legislation that Congress passed and President Barack Obama signed into law in March. According to Congress’ Joint Committee on Taxation, under the new law a business is required to file a 1099 form “for all payments aggregating $600 or more in a calendar year to a single payee.”

Between now and the Jan. 1, 2012 effective date for the law, the IRS will be formulating regulations that spell out what businesses must do under the law. Eric Smith, a spokesman for the agency, said that as with any regulations, the public will be able to comment on those regulations before they also take effect.

Because the regulations don’t yet exist, it’s hard to predict exactly what businesses will have to do to comply.

The law is designed to stop businesses, in this case vendors, from evading taxes on their income. The fact is, there are companies that don’t report all their sales, particularly small transactions. But if a customer has to issue a 1099, which reports a payment to the government, the vendor that doesn’t report a matching sale could get a letter from the IRS questioning the discrepancy.

PAPERWORK OVERLOAD?

There’s no getting around the fact that a requirement that companies issue 1099s for purchases will create more work. How big the burden is will depend in part on how many purchases a business makes. But the greater determinant will be how organized the company is. Owners whose accounting system is a pile of receipts jammed into file folders are going to have a miserable time.

The easiest way to keep records of your business purchases is with software that tracks all your expenses. But while software to help small businesses keep their books is relatively inexpensive – some programs cost less than $200 – accountants say many owners are still shy about going high-tech.

The new 1099 requirement might persuade some of the reluctant ones to make the change. Software designed to help run a small business includes payroll applications that can generate 1099s. The companies that make the software will have updated versions that comply with the new law by the time it goes into effect. So the same software that tracks your purchases will be able to create 1099s and make it easy for you to send them to the IRS.

Read the full article HERE.

To read another informative article on this same topic click HERE.

The U.S Chamber’s Institute for Legal Reform just released its survey results for this year and Delaware is ranked #1 for the seventh year in a row as the state with the best legal climate! This is important because your business will benefit if you are incorporated in Delaware; the state is ranked #1 for the impartiality and competence of its judges and the fairness of its juries. Below is an excerpt:

The U.S. Chamber’s Institute for Legal Reform (ILR) today released its survey ranking the states with the best and worst legal climates in the country. According to the survey, the states with the worst legal climates are California (46th), Alabama (47th), Mississippi (48th), Louisiana (49th), and West Virginia (50th). The states with the best legal climates are Delaware (1st), North Dakota (2nd), Nebraska (3rd), Indiana (4th), and Iowa (5th).

The survey also shows that a state’s legal climate affects how and where a company does business and creates jobs. Two-thirds, or 67%, of the 1,482 corporate lawyers and executives contacted say a state’s lawsuit environment is likely to impact important business decisions at their company, such as where to locate or expand their businesses. That is up 10% from just three years ago.

Check out the detailed results HERE.

Toyota Motors is a company that heavily promotes its engineering innovation, production quality and service reliability.  In a haymaker blow to Toyota’s reputation, the company suspended production and sales of eight of its most popular models — including America’s (previously) best-selling car, the Camry.  And now Toyota is recalling millions of already-sold cars worldwide to fix a potentially life-threatening problem: unintended acceleration.

(Disclosure: I have a personal stake in this story: I own a second-generation Toyota Prius.)

This week Toyota began shipping parts to dealers across the country to correct an accelerator problem that could lead to cases of disastrous unintended acceleration.  The Toyota problem is so serious the automaker stopped production and sales on eight of its top-selling models — including the Camry, the best-selling car in the U.S.  The scope of the problem is staggering: I’ve seen stories on the web sites of European, Japanese, South African, Canadian and Israeli newspapers.  Toyotas sold in China have also been implicated.

I always judge a company’s handling of a crisis by what I call the Tylenol Standard.  Back in 1982, Extra-Strength Tylenol capsules were the best-selling over-the-counter pain reliever in the United States.  Then, seven people in the Chicago area died; they had all been taking the drug.  J & J jumped into action with an approach that is taught in business schools to this day.  The company suspended all production of Tylenol immediately.  It recalled the 31 million bottles of Tylenol then on store shelves, destroying all the medication that was returned.  It launched a rigorous inspection of all its manufacturing facilities. And, Johnson & Johnson made top officials readily available to the media where their story was: “We don’t know how this happened.  We will find out and correct it.  Meanwhile, do not use any of our products that you have at home; return them immediately, and report any adverse effects from our medication that you have already taken.”

The company’s response was fast, comforting and took a page from the Harry Truman adage: “The buck stops here.”

As it turned out, the buck did not stop at Johnson & Johnson.  The Tylenol deaths were murders, not the result of accidental contamination.  Someone had tampered with some Extra-Strength Tylenol boxes in drug stores around Chicago. The killer opened the packaging and the bottles, inserted potassium cyanide into the capsules and then resealed everything and put the product back on the shelves.  Police and FBI theorized the killer had a specific target in mind but killed others in order to make his intended victim look like a random casualty in a series of accidental poisonings-by-contamination.  (The case remains unsolved to this day, possibly because the intended victim never took the contaminated drug.)

Within a year, Extra-Strength Tylenol had regained its position as the country’s top-selling pain killer.   Unfortunately, the Toyota brass must have cut class in business school the day they taught the 1982 Tylenol lesson.

Toyota was late to the table with an admission that there was, indeed, a problem and slow with information to the media (and through the media to the millions of Toyota owners worldwide).  This sowed the seeds of confusion and resulted in a serious erosion of trust in the company.

Toyota’s worldwide president, Akio Toyoda, grandson of the company’s founder,  made no statements to the media and no apologies to customers until a crew from NHK, the Japanese TV network cornered him at the World Economic Summit in Davos the last week of January.  This reclusive behavior despite the fact that the issue has gained massive media attention since last August when an off-duty California Highway Patrol officer and three family members burned to death after crashing a runaway Lexus they had borrowed from a dealer in San Diego.  The company’s U.S. president, Jim Lentz, was also noticeably absent from the media until February 1, when it was time to announce the fix.  Then he began a media blitz explaining the problem and the repair, a belated attempt to restore Toyota’s battered image.

But wait, there’s more, as the infomercials say.  If you look at the list of cars being recalled for the accelerator fix (below) you’ll notice that the Lexus in which Highway Patrol officer  Mark Saylor died — a 2009 ES — is not on it.  That’s because those cars — and many other Toyota-made cars, including my Prius — were subject to an earlier recall, back in November, 2009.  In that recall, the Lexus accelerator pedals were shortened so they could not be trapped under the floor mat — the ostensible cause of Officer Saylor’s accident. (For the Prius, I was just told to remove the mat — which I had already done.  It still sits in my trunk awaiting the promised “permanent fix.”

But at the same time as the mat matter was being handled, Toyota was aware that for six years both the company and the National Highway Traffic Safety Administration has been looking into multiple cases of unintended acceleration and that the mats were unlikely culprits in all of them.  In its autumn response, Toyota tried to sweep the more basic accelerator problem under the floor mat problem.  In fact, in November, Toyota put out a press release misrepresenting the NHTSA’s conclusions about the floor mats and had to issue another press release correcting the first one.  But neither press release acknowledged that unintended acceleration might have been caused by anything other than misplaced or mismatched floor mats.

So there were two problems and initially Toyota tried to conflate the simpler problem (the mats) with the more serious problem (the accelerator mechanism).  The mat recall affected 3.8 million vehicles and despite the fact that NHTSA told Toyota that mat removal was at best an interim solution, no long-term solutions has been reached for many of those recalled cars.  The faulty accelerator affects 4.6 million vehicles, some of which were previously involved in the mat recall (with the attendant danger that owners who addressed the mat problem will now think the entire problem solved.)

Here is a list of the cars in the current Toyota recall.

• 2009-2010 RAV4

• 2009-2010 Corolla

• 2009-2010 Matrix

• 2005-2010 Avalon

• 2007-2010 Camry

• 2010 Highlander

• 2007-2010 Tundra

• 2008-2010 Sequoia

The Jobs vs. Obama column was written before either man spoke. And it highlights a key point for me as a media trainer and consultant: Apple had generated nearly as much advance publicity for Jobs’ introduction of the new iPad by doing and saying nothing more than, “We’re going to be having an important announcement, we hope you’ll cover it” as the White House generated by selectively leaking elements of the State of the Union for the better part of a week.

It is counter-intuitive — and flies in the face of what I normally counsel clients — to generate publicity by shunning publicity. But in Apple’s case, it works. With iPad, it worked with amazing success.

A quick search in Google News immediately before Jobs introduced the iPad revealed hundreds of articles, hyping the new tablet computer and building expectations with a brio that would embarrass a Hollywood press agent. These pieces were, without exception, written by journalists and bloggers who not only had never gotten their hands on the gadget, but who could not be 100 percent sure it even existed. Articles predicted that the forthcoming Apple tablet was going to save print journalism from the fate of the dinosaurs, reinvent book and magazine reading, revolutionize electronic games, and dwarf the iPhone in lifestyle impact. I sampled about a dozen articles while waiting for the live blogging from Jobs’ announcement and 99 percent of them were rave previews of a totally unknown object. The one percenters tended to write comments along the lines of: “There is no market for tablet computers” (because previously tablets had failed); “The Apple tablet will be too expensive.” (The generally accepted price dredged from the swamp of ignorance was a thousand bucks.), and “Apple is due for a flop.” (These journalists would be well advised to steer clear of Las Vegas’ gaming tables.)

A search of the New York Times website yielded half a dozen articles in just the week leading up to the Jobs announcement — clearly all of them written without any input from Apple spokespersons or from the New York Times digital folks who were cooperating with Apple on creating content for the iPad. (Jobs presentation featured a view of a New York Times front page on the iPad with photo slide shows, moving video on some stories and fonts that could be enlarged with the flick of a finger.)

What lesson can we learn from the free buzz Apple was able to generate? Avoid the media and they’ll write stories about you anyway? No. That tactic works only for the likes of Steve Jobs and Apple, Inc. Why? Three reasons:

1.  Apple’s track record. Although the company has had false starts since Jobs returned to the helm in 1997 (Apple TV, Mac Mini), by and large the product line has been game-changing with iPod, iMac, MacBook, iPhone and iPod Touch. So the media’s expectations are always great when Apple announces not a new product but the fact that it is GOING to announce a new product.

2.  Apple’s secrecy. The company’s passion for privacy and information control reminds me of nothing so much as North Korea. Case in point: the stonewalling that surrounded Jobs’ very serious illnesses which culminated in a liver transplant last year. Apple’s clandestine ways are an irresistible lure for media types who love to speculate.

3.  Steve Jobs’ charisma.  The media love celebrities and Jobs is one of the handful of business celebrities in the world today.

What works for Apple won’t work for the rest of us. We have to work to get in the media. We have to go out and seek attention; we can’t gain it by hiding under a rock. We have to drop hints, give out advance samples, supply facts and court journalists.  Remember, even the President leaked the substance of his State of the Union address before he made his speech.

Oh, and by the way, the iPad, despite a name which some observers feel begs comparison with a feminine hygiene products, appears to be that game-changer that the speculators thought could help (if not save) print journalism, alter the way we read books and revolutionize electronic gaming. The early media speculators missed two very important points: business capabilities and price. None of the advance stories I read noted the tablet would offer three $10 software programs that enable a business user to write documents and spreadsheets and to create and display Apple’s Keynote slide shows (think PowerPoint on steroids). This gives what otherwise would be a personal leisure device — a turbo-charged book reader and media player — appeal to the business buyer and widens the possible customer base. (As does the optional keyboard dock which will appeal to those who can’t imagine writing anything serious on a touch screen.) As to cost, the predictions of an $800 to $1,000 price tag were off by a significant margin. Base price for the iPad is $500 and the device can go up to $800, depending on flash drive storage capacity and connectivity options.

One final note: Jobs looked as thin as he had when he returned to the company after his liver transplant surgery, but he was energetic and his voice was vigorous. Is he okay? Don’t expect to get any accurate information about his condition from Apple; that’s just not the way they do business in Cupertino.