Small business owners need to read this recent article from The Washington Post. It does a very good job explaining the new law buried in the healthcare bill requiring small businesses to issue 1099 forms to people or companies that sell them more than $600 worth of goods or services and it offers ideas on how to handle all this new paperwork. Read an excerpt below:

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.

Gone are the days when social networking websites were only for college kids. It is essential for small business owners to be utilizing all of the free social networking tools out there. It’s a great way to make the internet work for you! Below are a few websites that are a great place to start.

LinkedIn: According to the site, more than 60 million professionals in 200+ countries use it to network, stay on top of the industry and establish new contacts.

PartnerUp: is an online community targeted at small business owners and entrepreneurs.

Ryze: is a social network for businesses that gives members a free homepage, from where they can send messages to other members. Users can also join networks related to specific industries, interests and locations.

Xing: is a global network that boasts more than 8 million active members using the site to manage business contacts.

One organization that every entrepreneur should know about is SCORE, a partner of the U.S. Small Business Administration (SBA). Since 1964 SCORE has been known as the “Counselors of America’s Small Business Owners.” SCORE is a non-profit association with a national network of 12,400 volunteers. The volunteers are successful entrepreneurs and executives who want to give back by sharing their expert business advice with you. There are local chapters throughout the nation that offer workshops and one-to-one business advising sessions. No matter what stage of business you are in, they are able to help. There are no business questions too simple or complex for SCORE counselors. So the next time you need business advice ask SCORE. We love that small business success across America is SCORE’s mission!

For more info, click HERE.