New rule on 1099 tax forms

From Chicagotribune.com

Small-business advice: New rule on 1099 tax forms
Also: Protect company computers from laid-off employees.

By Karen E. Klein

September 13, 2010

Dear Karen: Does the healthcare law require me to send out more 1099s?

Answer: A provision of health insurance reform that goes into effect in 2012 requires companies to issue a tax form 1099 to any vendor with whom they spend $600 or more annually on goods or services. It is an attempt to close an estimated $300-billion tax gap on unreported income, said Gregg Wind, a certified public accountant with Wind & Stern in Los Angeles.

Because companies currently issue 1099s mainly to independent service providers, accountants have warned that this provision could double accounting costs for small firms. But because the provision is controversial, it may be overturned or limited before it goes into effect.

“Hopefully the impact will be minimal for somebody who’s using an automated tax package. If nothing else would spur small companies to automate, this might do it,” Wind said.

• Cut off ex-employees’ computer access

Dear Karen: How can we protect our business from laid-off employees?

Answer: Aside from securing your physical premises, make sure you block former employees’ computer privileges, said Jon Heimerl, director of strategic security for Solutionary, an information security firm.

Before laying off an employee, determine where he has access to the company’s computer files and networks, including e-mail, internal systems and customer accounts. Revoke that access as soon as he is let go, then scan all your systems for viruses and malware and make sure you back up everything, Heimerl said.

Small-business questions? E-mail Karen at smallbiz@latimes.com

Copyright © 2010, Los Angeles Times

Full Article Here: http://www.chicagotribune.com/business/smallbusiness/la-fi-smallbiz-qa-20100913,0,2900949.story

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