One of the little-known provisions of the Affordable Healthcare Act (Obamacare) is that all businesses will in 2013 be required to submit 1099’s to the IRS for every vendor/supplier for which they spend more than $600. This will affect 30 million businesses and will generate hundreds of millions of 1099’s, millions of hours of accounting and paperwork headaches not to mention the productivity-sapping effect of implementing systems to track such expenses.
The article gives an example of the 1099 provision that should prompt all small business owners to action. A trucking business, with dozens of trucks, will now have to issue 1099’s for every gas station where each truck spends more than $600 for something as basic as fuel – truly a paperwork nightmare.
Personally, MyNewCompany.com incorporates businesses in all 50 states. This typically includes us paying the filing fee for our clients to the state. Now imagine, state fees run from $25 to $500, we easily spend more than $600/year in the vast majority of states, we usually spend more than that in a day for bigger states like Texas, Florida and California. So basically we will be issuing upwards of 50 1099’s for that expense alone – that doesn’t include our dozens of other vendors.
When I started writing this alert, I didn’t even realize the effect on MyNewCompany until I wrote the previous paragraph even though I’d been aware of the law for a few weeks. Imagine the millions of businesses that have no idea of the new law, what they’ll need to track or even how to track it.
If you care about small business or are a small business owner, you need to contact your Congressperson and Senator and ask them to repeal the 1099 provision of the Healthcare Reform Act. It is a business-killing, paperwork nightmare that threatens to make an already bad economy even worse.