Unless you read the new Healthcare law carefully, you could miss all the regulations completely unrelated to healthcare.  The most egregious being the requirement that all businesses  report on a 1099 whenever they pay any vendor or contractor more than $600/year.

Yes, if you have Google AdSense,  your blog is a business.  That new computer you want to buy and write off; better make sure you have a 1099 form handy.

This extra paperwork is estimated to cost small businesses $19 Billion dollars over the next 10 years.  Even if your business is doing minimal sales, this will be required.

Currently, businesses have to file 1099-MISC forms only for freelancers and other service providers that aren’t incorporated.  The government wants to make sure these self employed people pay taxes and can’t avoid reporting income.   The new rule, set to take effect in 2012, will expand the reporting to everyone and for goods as well as services.

As a business owner, you will need to get the tax ID numbers for everyone you deal with and keep track of all your expenses.   You will probably have to file the forms for almost everyone since the limit is $600/year.

As an example, a nail salon would have to file about 80 1099 forms based on an unscientific poll I did recently with my local nail place.

Bloggers!  If you’re spending money on your blog, you get to experience this too.

For my own business, I can’t even begin to estimate how many forms I would have to do.  Currently, these are just some of the main vendors that I have to request tax IDs from and track:

• Cell phone company

• Gas Station

• UPS

• My local deli (or stop hosting support groups)

• Best Buy

• Newegg.com

• Staples

• Copier rental

• Apple

• Cable company

• Phone company

• Landlord

• My cleaning guy

• The multiple states that I pay registration fees to.  Texas comes to mind since one license costs more than $600/year.

• The airlines and hotels for all my meetings out of state

Do any of these costs seem familiar to you as a fellow business owner?   If so, you and I will be in the same boat: drowning under a sea of massive paperwork.   Aside from the annoyance and accountant costs, we will be losing additional money because of the lost time spent on documentation instead of getting new business.

What can we do about this?  Start by contacting your local congressmen to request a repeal of this onerous regulation.

Unfortunately, a bill like this often gets packaged with enough “pork” that it will fail to pass.

This exact thing happened recently when a proposal to repeal this rule was previously struck down.   As a result, H.R. 5982 failed to pass when it was introduced an hour before Congress was supposed to leave for their August vacation break.

It is critical that we all work together to get the repeal passed as a standalone bill.  There is currently one that addresses this issue and is gathering dust in committee.  It is called H.R. 5141 – the Small Business Paperwork Mandate Elimination Act.  Otherwise, there is a high risk that a shopping trip to Staples may require a 1099 form, along with a credit card.

Do you think this provision in the health care bill will be an issue for you?

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