While the national economy is slowly recovering, many businesses are likely seeing boosts in revenue. However, more income means more taxes. In light of this, entrepreneurs should consider how the new healthcare reform changes the way they file business taxes.
Under the current federal business tax laws, companies that make payments of more than $600 to a person or a business over the course of a year have to file Form 1099 to report those payments – however, payments made to a corporation or those made in exchange for merchandise do not need to be reported.
Now, the Boston Globe reports that the healthcare reform bill changes the scope of 1099 reporting requirements.
Corporations or payments for merchandise will not be exempt from 1099 reporting as of January 1, 2012. This means the majority of payments made by a business will now need to be reported – including revenue.
The source predicts that this will be difficult for companies in the first year or two, however it also predicts that the IRS will be able to match these payments dollar for dollar on tax returns. The measure could ultimately benefit businesses, offering a whole new incentive for forming a company.
While the new filing measures may take extra paperwork, the process of business incorporation can simplified by online incorporation services that take care of the necessary filing for a company.
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