Small business owners take note: one of the provisions in the health care reform bill recently signed into law impacts the way businesses issue 1099s. Currently, a business is only required to issue 1099s to individuals who perform services for the company (independent contractors, accountants, lawyers, etc.). But a provision in the health care bill would require 1099s to also be issued to any corporation from which you purchase more than $600 worth of goods in a year.
For example, let’s say you spend $1,000 at Best Buy to buy a new computer for your business. Under current law, you don’t have to issue a 1099 to Best Buy, because Best Buy is a corporation, and the purchase is for goods instead of services. But the new law will require you to issue a 1099 to Best Buy, and to any other supplier or vendor you do more than $600 worth of business with. So, if you have dozens of suppliers and you buy more than $600 worth of goods from each of those suppliers, you’ll be issuing dozens of 1099s.
This change is set to take affect January 1, 2012. You can read more about it here.
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